X-Efficiency: Taking Some Time Off Blogging

Wednesday, December 20, 2006

Taking Some Time Off Blogging

I just decided that I will take some time off for the holidays, unless I found something really worthwhile.

In the mean time, I wish you all a Merry Christmas.

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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