“the combination of conditions 2 and 3 still has some changes being labeled as improvements that wouldn’t be improvements under the old concept of Pareto Optimality.”
Why? Condition 3 implies that U_{RO,j} \leq U_{RO’,j}. So, together with condition 2, we get that U_{RO,j} \leq U_{RO’,j} for any j. That precisely means that this is a Pareto improvement in the usual sense.
“the combination of conditions 2 and 3 still has some changes being labeled as improvements that wouldn’t be improvements under the old concept of Pareto Optimality.”
Why? Condition 3 implies that U_{RO,j} \leq U_{RO’,j}. So, together with condition 2, we get that U_{RO,j} \leq U_{RO’,j} for any j. That precisely means that this is a Pareto improvement in the usual sense.