X-Efficiency: This is FUNNY!!

Tuesday, October 31, 2006

This is FUNNY!!

I don't think we have that in the government.......

Anyhow, just want to put something "light" for once in a while. Hope that this will not offend anyone. After all, this is from a comedy show!!

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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