 An allocation is envy-free if no individual would prefer having the bundle of another. An egalitarian distribution in which everyone has the same bundle is trivially envy-free, but is generally Pareto-inefficient, which means that there exist other feasible allocations that are better for some individuals and worse for none. A competitive equilibrium with equal shares (i.e., equal budgets) is the central example of a Pareto-efficient and envy-free allocation. It is envy-free since all agents have the same budget options, so that everyone could buy everyone’s bundle. It is Pareto-efficient because, by an important theorem of welfare economics, any perfectly competitive equilibrium is Pareto-efficient (in absence of asymmetric information, externalities, public goods). A non-technical presentation of this theorem can be found in Hausman and McPherson (2006, 5.2).