X-Efficiency: An Economist Trying to Explain the Rise in Teen Oral Sex

Wednesday, September 06, 2006

An Economist Trying to Explain the Rise in Teen Oral Sex

Got this story via Mankiw's blog. Again, both Mankiw and DeLong's blog are becoming my daily "fixes".

For those who don't know, "Economists do it with models!!"

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"A monopolist may be X-inefficient either because it does not have an incentive to be more efficient due to lack of competition or it does not have the opportunity to observe and learn from other more efficient firms in the industry. In an industry high profits may imply high prices due to x-inefficiency. However, excess profits do not necessarily mean that consumers are paying higher prices. And, lack of excess profit does not necessarily indicate competition or cost efficiency." Leibenstein, Harvey. 1966. "Allocative Efficiency vs. 'X-Efficiency'," American Economic Review 56, (June), pp. 392-415