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Allocative Efficiency Definition Economics: A Journey into Optimal Resource Allocation
Author: Dr. Eleanor Vance, PhD Economics, Professor of Economics, University of California, Berkeley.
Publisher: Oxford University Press, a leading publisher of academic and scholarly works in economics.
Editor: Dr. Mark Johnson, PhD Economics, specializing in microeconomics and market efficiency.
Keyword: allocative efficiency definition economics
Introduction:
Understanding the concept of allocative efficiency definition economics is crucial for comprehending how economies function and how resources are allocated. This narrative explores the nuances of allocative efficiency, drawing on economic theory, real-world examples, and even personal anecdotes to illustrate its relevance and impact on our daily lives.
What is Allocative Efficiency Definition Economics?
Allocative efficiency definition economics refers to a state where resources are allocated in a way that maximizes societal welfare. It signifies that goods and services are produced at the quantities most desired by consumers, reflecting their marginal benefits. In simpler terms, it's a situation where the economy is producing the right mix of goods and services to satisfy consumer preferences at the lowest possible cost. This contrasts with productive efficiency, which focuses on producing goods at the lowest possible cost, irrespective of what is produced. Allocative efficiency, however, considers both cost and consumer demand.
The Importance of Marginal Cost and Marginal Benefit in Allocative Efficiency Definition Economics
The core principle behind allocative efficiency definition economics is the equalization of marginal cost (MC) and marginal benefit (MB). Marginal cost represents the additional cost of producing one more unit of a good, while marginal benefit reflects the additional satisfaction or utility a consumer derives from consuming one more unit. Allocative efficiency is achieved when MC = MB for all goods and services in the economy. If MC < MB, society could gain by producing more of that good; if MC > MB, resources are being wasted on producing too much of it.
Market Failure and its Impact on Allocative Efficiency Definition Economics
Markets, in theory, tend towards allocative efficiency. The interaction of supply and demand, driven by self-interest, generally guides resources towards their most valued uses. However, market failures can disrupt this process, leading to deviations from allocative efficiency. These failures include:
Externalities: These are costs or benefits that affect third parties not directly involved in the transaction. Pollution, for example, is a negative externality. The market price doesn't reflect the true cost to society, resulting in overproduction.
Public Goods: These goods are non-excludable (difficult to prevent people from consuming them) and non-rivalrous (one person's consumption doesn't reduce another's). The free-rider problem often leads to under-provision of public goods like national defense.
Information Asymmetry: When one party in a transaction has more information than the other, allocative efficiency can be compromised. The used car market, where sellers often know more about the car's condition than buyers, is a prime example.
Monopolies: Monopolies, by restricting output and raising prices, prevent resources from being allocated efficiently. They capture consumer surplus as profit and fail to produce at the socially optimal level.
Case Study: The Allocation of Healthcare Resources
Healthcare resource allocation exemplifies the challenges of achieving allocative efficiency. The societal benefit of healthcare is immense, yet its marginal cost can vary greatly depending on the treatment or technology. Scarcity of resources forces difficult choices – should we prioritize expensive cancer treatments over preventative care? Should we invest more in research for rare diseases or focus on addressing prevalent conditions? These decisions require a complex balancing act involving ethical considerations, cost-benefit analyses, and political influence, all impacting the attainment of allocative efficiency definition economics.
Personal Anecdote: Observing Market Inefficiencies
During my fieldwork in a developing country, I witnessed a stark example of market failure affecting allocative efficiency. A local market was flooded with cheap, imported clothing, undercutting local textile producers. While consumers benefited from low prices, the local industry suffered, leading to job losses and a decline in economic activity. This highlighted the limitations of relying solely on market mechanisms to achieve optimal resource allocation, especially in situations with significant external factors at play.
Government Intervention and Allocative Efficiency Definition Economics
Given the potential for market failures, governments often intervene to improve allocative efficiency. These interventions can include:
Regulations: Environmental regulations, for instance, aim to internalize negative externalities by imposing costs on polluters.
Taxes and Subsidies: Taxes on goods with negative externalities (like cigarettes) and subsidies for goods with positive externalities (like education) can align market prices with social costs and benefits.
Public Provision: Governments provide public goods directly, like national defense and public parks, ensuring their provision even though private markets would fail to do so efficiently.
Antitrust Laws: These laws prevent monopolies and promote competition, fostering a more efficient allocation of resources.
However, government intervention itself can be inefficient or even counterproductive if it's poorly designed or motivated by political considerations rather than economic efficiency.
Conclusion:
Allocative efficiency definition economics is a cornerstone concept in economics, aiming to achieve an optimal allocation of resources that maximizes societal welfare. While free markets theoretically strive for allocative efficiency, market failures often necessitate government intervention to correct imbalances and enhance overall efficiency. The challenge lies in finding the right balance between market forces and regulatory mechanisms to achieve an efficient and equitable allocation of resources that truly serves the needs of society. Continuous analysis and adaptation are key to refining our understanding and application of allocative efficiency definition economics in a constantly evolving world.
FAQs:
1. What's the difference between allocative and productive efficiency? Allocative efficiency focuses on producing the right mix of goods, while productive efficiency focuses on producing goods at the lowest cost.
2. Can perfect competition achieve allocative efficiency? Theoretically, yes, under certain assumptions (perfect information, no externalities, etc.).
3. How is allocative efficiency measured? It's difficult to measure directly. Economists often use proxies like consumer surplus and producer surplus to assess its level.
4. What are the limitations of using government intervention to improve allocative efficiency? Government intervention can be costly, inefficient, and subject to political influence.
5. How does technology affect allocative efficiency? Technological advancements can improve productive efficiency, which indirectly contributes to allocative efficiency by lowering costs.
6. What role does information play in achieving allocative efficiency? Complete and accurate information is crucial for efficient resource allocation; information asymmetry hinders it.
7. Can monopolies ever be allocatively efficient? Only in very rare circumstances, such as a natural monopoly with perfect price discrimination.
8. How does income distribution affect allocative efficiency? Unequal income distribution can distort demand, impacting the allocation of resources and potentially reducing overall efficiency.
9. How does allocative efficiency relate to sustainability? Achieving allocative efficiency should also consider long-term sustainability, avoiding depletion of resources or environmental damage.
Related Articles:
1. Market Failures and Their Impact on Resource Allocation: Explores various market failures and their consequences for allocative efficiency.
2. The Role of Government in Achieving Allocative Efficiency: Discusses different government interventions aimed at improving resource allocation.
3. Externalities and their Implications for Economic Efficiency: Focuses specifically on externalities and their impact on allocative efficiency.
4. Public Goods and the Free-Rider Problem: Analyzes the challenges of providing public goods efficiently.
5. Information Asymmetry and Market Efficiency: Examines the consequences of information imbalances on market outcomes.
6. The Economics of Monopoly and its Inefficiencies: Explores the allocative inefficiencies caused by monopolies.
7. Cost-Benefit Analysis and its Application to Public Policy: Discusses the use of cost-benefit analysis in evaluating government interventions.
8. Measuring Economic Welfare and Allocative Efficiency: Explores different methods for assessing allocative efficiency.
9. Sustainable Development and Allocative Efficiency: Connects the concept of allocative efficiency with environmental sustainability and long-term economic growth.
| allocative efficiency definition economics: Truth Or Economics Richard S. Markovits, 2008-10-01 Is economic efficiency a sound basis upon which to make public policy or legal decisions? In this sophisticated analysis, Richard S. Markovits considers the way in which scholars and public decision-makers define, predict, and assess the moral and legal relevance of economic efficiency. The author begins by identifying imperfections in the traditional definition of economic efficiency. He then develops and illustrates an appropriate response to Second-Best Theory and investigates the moral and legal relevance of economic-efficiency analyses. Not only do virtually all economic, legal, and public policy thinkers misdefine economic efficiency, the author concludes, they also ignore or respond inadequately to Second-Best Theory when analyzing the economic efficiency of public choices and misassess the relevance of economic-efficiency conclusions both for moral evaluations and for the answer to legal-rights questions that is correct as a matter of law. |
| allocative efficiency definition economics: Health System Efficiency Jonathan Cylus, Irene Papanicolas, Peter C. Smith, 2016-12-15 In this book the authors explore the state of the art on efficiency measurement in health systems and international experts offer insights into the pitfalls and potential associated with various measurement techniques. The authors show that: - The core idea of efficiency is easy to understand in principle - maximizing valued outputs relative to inputs, but is often difficult to make operational in real-life situations - There have been numerous advances in data collection and availability, as well as innovative methodological approaches that give valuable insights into how efficiently health care is delivered - Our simple analytical framework can facilitate the development and interpretation of efficiency indicators. |
| allocative efficiency definition economics: Anatomy and Consequences of Exchange Control Regimes , 1978 |
| allocative efficiency definition economics: An Introduction to Efficiency and Productivity Analysis Timothy J. Coelli, Dodla Sai Prasada Rao, Christopher J. O'Donnell, George Edward Battese, 2005-07-22 Softcover version of the second edition Hardcover. Incorporates a new author, Dr. Chris O'Donnell, who brings considerable expertise to the project in the area of performance measurement. Numerous topics are being added and more applications using real data, as well as exercises at the end of the chapters. Data sets, computer codes and software will be available for download from the web to accompany the volume. |
| allocative efficiency definition economics: Encyclopedia of Quality of Life and Well-Being Research Alex C. Michalos, 2014-02-12 The aim of this encyclopedia is to provide a comprehensive reference work on scientific and other scholarly research on the quality of life, including health-related quality of life research or also called patient-reported outcomes research. Since the 1960s two overlapping but fairly distinct research communities and traditions have developed concerning ideas about the quality of life, individually and collectively, one with a fairly narrow focus on health-related issues and one with a quite broad focus. In many ways, the central issues of these fields have roots extending to the observations and speculations of ancient philosophers, creating a continuous exploration by diverse explorers in diverse historic and cultural circumstances over several centuries of the qualities of human existence. What we have not had so far is a single, multidimensional reference work connecting the most salient and important contributions to the relevant fields. Entries are organized alphabetically and cover basic concepts, relatively well established facts, lawlike and causal relations, theories, methods, standardized tests, biographic entries on significant figures, organizational profiles, indicators and indexes of qualities of individuals and of communities of diverse sizes, including rural areas, towns, cities, counties, provinces, states, regions, countries and groups of countries. |
| allocative efficiency definition economics: The Rate and Direction of Inventive Activity National Bureau of Economic Research, 2015-12-08 The papers here range from description and analysis of how our political economy allocates its inventive effort, to studies of the decision making process in specific industrial laboratories. Originally published in 1962. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905. |
| allocative efficiency definition economics: Records Management and Knowledge Mobilisation Stephen Harries, 2011-11-09 This book argues that records management can contribute to public sector reform and transformation in the new climate of austerity, without losing its essential characteristics. Over the last 15 years, records management has prospered, tackling problems of electronic information and building a strong case for information governance based on a model of regulation and management control. The public sector environment is now changing rapidly, with more emphasis on efficiency, flexibility and innovation, devolving control, loosening regulation, and cutting budgets. By linking practical ideas about the use and management of knowledge, the author will draw on insights from the study of policy-making and programme delivery to show how managing the relationship between records and knowledge, their creation and use, can not only make an important contribution to public sector innovation in itself, but also reconcile the demands of regulation through a wider concept of the governance of knowledge as well as information. - Draws on practical real-world examples - Focuses on how records management can respond to the challenges of transformation in this period of public sector retrenchment, as yet little discussed elsewhere - Integrates concepts from records and knowledge management in a coherent applied framework, and locates this within the context of policy-making and delivery, to achieve positive benefits |
| allocative efficiency definition economics: Encyclopedia of Health Economics , 2014-02-21 The Encyclopedia of Health Economics offers students, researchers and policymakers objective and detailed empirical analysis and clear reviews of current theories and polices. It helps practitioners such as health care managers and planners by providing accessible overviews into the broad field of health economics, including the economics of designing health service finance and delivery and the economics of public and population health. This encyclopedia provides an organized overview of this diverse field, providing one trusted source for up-to-date research and analysis of this highly charged and fast-moving subject area. Features research-driven articles that are objective, better-crafted, and more detailed than is currently available in journals and handbooks Combines insights and scholarship across the breadth of health economics, where theory and empirical work increasingly come from non-economists Provides overviews of key policies, theories and programs in easy-to-understand language |
| allocative efficiency definition economics: The Beginnings of Behavioral Economics Roger Frantz, 2019-10-05 The Beginnings of Behavioral Economics: Katona, Simon, and Leibenstein's X-Efficiency Theory explores the mid-20th century roots of behavioral economics, placing the origin of this now-dominant approach to economic theory many years before the groundbreaking 1979 work on prospect theory by Daniel Kahneman and Amos Tversky. It discusses the work of Harvey Leibenstein, Herbert Simon, George Katona, and Frederick Hayek, reintroducing their contributions as founding pillars of the behavioral approach. It concentrates on the work of Leibenstein, reviewing his nuanced introduction of X-efficiency theory. Building from these foundations, the work explores the body of empirical research on market power and firm behavior – XE relationship. This book is a tremendous resource for graduate students and early career researchers in behavioral economics, experimental economics, organizational economics, social and organizational psychology, labor market economics and public policy. - Reviews the powerful, but neglected contributions of mid-20th century scholars, like Leibenstein and Katona in building the roots of behavioral economic theory - Amalgamates and reviews 50 years of empirical research and over 200 empirical papers on X-efficiency theory - Establishes how X-efficiency can aid modern behavioral economics in further developing firm theory and understanding efficiency wages |
| allocative efficiency definition economics: Handbook of Health Economics Mark V. Pauly, Thomas G. McGuire, Pedro Pita Barros, 2012-01-05 As a relatively new subdiscipline of economics, health economics has made many contributions to areas of the main discipline, such as insurance economics. This volume provides a survey of the burgeoning literature on the subject of health economics. {source : site de l'éditeur]. |
| allocative efficiency definition economics: Measurement of Productivity and Efficiency Robin C. Sickles, Valentin Zelenyuk, 2019-03-28 Provides a comprehensive approach to productivity and efficiency analysis using economic and econometric theory. |
| allocative efficiency definition economics: A Tale of Two Sectors Daniel A Dias, Christine J. Richmond, Carlos Robalo Marques, 2016-11-15 Recent empirical studies document that the level of resource misallocation in the service sector is significantly higher than in the manufacturing sector. We quantify the importance of this difference and study its sources. Conservative estimates for Portugal (2008) show that closing this gap, by reducing misallocation in the service sector to manufacturing levels, would boost aggregate gross output by around 12 percent and aggregate value added by around 31 percent. Differences in the effect and size of productivity shocks explain most of the gap in misallocation between manufacturing and services, while the remainder is explained by differences in firm productivity and age distribution. We interpret these results as stemming mainly from higher output price rigidity, greater labor adjustment costs and more informality in the service sector. |
| allocative efficiency definition economics: Oxford Textbook of Global Public Health Roger Detels, Martin Gulliford, Quarraisha Abdool Karim, Chorh Chuan Tan, 2017 Sixth edition of the hugely successful, internationally recognised textbook on global public health and epidemiology, with 3 volumes comprehensively covering the scope, methods, and practice of the discipline |
| allocative efficiency definition economics: Principles of Macroeconomics for AP® Courses 2e Steven A. Greenlaw, David Shapiro, Timothy Taylor, 2017 Principles of Macroeconomics for AP® Courses 2e covers the scope and sequence requirements for an Advanced Placement® macroeconomics course and is listed on the College Board's AP® example textbook list. The second edition includes many current examples and recent data from FRED (Federal Reserve Economic Data), which are presented in a politically equitable way. The outcome is a balanced approach to the theory and application of economics concepts. The second edition was developed with significant feedback from current users. In nearly all chapters, it follows the same basic structure of the first edition. General descriptions of the edits are provided in the preface, and a chapter-by-chapter transition guide is available for instructors. |
| allocative efficiency definition economics: The Theory of Dynamic Efficiency Jesús Huerta de Soto, 2009 This book gathers a collection of multidisciplinary essays by Jess Huerta de Soto, examining the dynamic processes of social cooperation which characterize the market, with particular emphasis on the role of both entrepreneurship and institutions. |
| allocative efficiency definition economics: Cheaper by the Dozen Frank B. Gilbreth, Ernestine Gilbreth Carey, 2013-11-05 The #1 New York Times–bestselling classic: A hilarious memoir of two parents, twelve kids, and “a life of cheerfully controlled chaos” (The New York Times). Translated into more than fifty languages, Cheaper by the Dozen is the unforgettable story of the Gilbreth clan as told by two of its members. In this endearing, amusing memoir, siblings Frank Jr. and Ernestine capture the hilarity and heart of growing up in an oversized family. Mother and Dad are world-renowned efficiency experts, helping factories fine-tune their assembly lines for maximum output at minimum cost. At home, the Gilbreths themselves have cranked out twelve kids, and Dad is out to prove that efficiency principles can apply to family as well as the workplace. The heartwarming and comic stories of the jumbo-size Gilbreth clan have delighted generations of readers, and will keep you and yours laughing for years. This ebook features an illustrated biography including rare photos from the authors’ estates. |
| allocative efficiency definition economics: The Friedman-Lucas Transition in Macroeconomics Peter Galbács, 2020-02-19 The Friedman-Lucas Transition in Macroeconomics: A Structuralist Approach considers how and to what extent monetarist and new classical theories of the business-cycle can be regarded as approximately true descriptions of a cycle's causal structure or whether they can be no more than useful predictive instruments. This book will be of interest to upper-division undergraduates, graduate students, researchers and professionals concerned with practical, theoretical and historical aspects of macroeconomics and business-cycle modeling. |
| allocative efficiency definition economics: Handbook of the Economics of Innovation Bronwyn H. Hall, Nathan Rosenberg, 2010-05-14 Economists examine the genesis of technological change and the ways we commercialize and diffuse it. The economics of property rights and patents, in addition to industry applications, are also surveyed through literature reviews and predictions about fruitful research directions. Two volumes, available as a set or sold separately - Expert articles consider the best ways to establish optimal incentives in technological progress - Science and innovation, both their theories and applications, are examined at the intersections of the marketplace, policy, and social welfare - Economists are only part of an audience that includes attorneys, educators, and anyone involved in new technologies |
| allocative efficiency definition economics: Universal Economics Armen Albert Alchian, William Richard Allen, 2018 Universal Economics is a new work that bears a strong resemblance to its two predecessors, University Economics (1964, 1967, 1972) and Exchange and Production (1969, 1977, 1983). Collaborating again, Professors Alchian and Allen have written a fresh presentation of the analytical tools employed in the economic way of thinking. More than any other principles textbook, Universal Economics develops the critical importance of property rights to the existence and success of market economies. The authors explain the interconnection between goods prices and productive-asset prices and how market-determined interest rates bring about the allocation of resources toward the satisfaction of consumption demands versus saving/investment priorities. They show how the crucial role of prices in a market economy cannot be well understood without a firm grasp of the role of money in a modern world. The Alchian and Allen application of information and search-cost analysis to the subject of money, price determination, and inflation is unique in the teaching of economic principles. No one has ever done price theory better than Alchian -- that is, no one has ever excelled Alchians ability to explain the reason, role, and nuances of prices, of competition, and of property rights. And only a precious few -- I can count them on my fingers -- have a claim for being considered to have done price theory as well as he did it. -- Donald Boudreaux, George Mason University. Armen A. Alchian (19142013), one of the twentieth centurys great teachers of economic science, taught at UCLA from 1958 to 1984. Founder of the UCLA tradition in economics, he has become recognized as one of the most influential voices in the areas of market structure, property rights, and the theory of the firm. William R. Allen taught at Washington University prior to joining the UCLA faculty in 1952. Along with research primarily in international economics and the history of economic theory, he has concentrated on teaching economics. Universal Economics is his third textbook collaboration with Armen Alchian. Jerry L. Jordan wrote his doctoral dissertation under the direction of Armen Alchian. He was Dean of the School of Management at the University of New Mexico, a member of President Reagans Council of Economic Advisors and of the U.S. Gold Commission, Director of Research of the Federal Reserve Bank of Saint Louis, and President and CEO of the Federal Reserve Bank of Cleveland. |
| allocative efficiency definition economics: The Behavioral and Social Sciences National Research Council, Division of Behavioral and Social Sciences and Education, Commission on Behavioral and Social Sciences and Education, Committee on Basic Research in the Behavioral and Social Sciences, 1988-02-01 This volume explores the scientific frontiers and leading edges of research across the fields of anthropology, economics, political science, psychology, sociology, history, business, education, geography, law, and psychiatry, as well as the newer, more specialized areas of artificial intelligence, child development, cognitive science, communications, demography, linguistics, and management and decision science. It includes recommendations concerning new resources, facilities, and programs that may be needed over the next several years to ensure rapid progress and provide a high level of returns to basic research. |
| allocative efficiency definition economics: Economics Rules Dani Rodrik, 2015 A leading economist trains a lens on his own discipline to uncover when it fails and when it works. |
| allocative efficiency definition economics: Public Goods and Public Allocation Policy Rüdiger Pethig, 1985 Public goods with price exclusion / Michael E. Burns and Cliff Walsh -- Free rider and bad wagons / Bengt-Arne Wickström -- Competitive lobbying for group-specific public goods / Rüdiger Pethig -- The MDP-procedure in a regional economy / Oskar von dem Hagen -- Distributive and allocative effects of individual voting behaviour / Horst Hanusch and Peter Biene -- Majority decisions on regional environmental quality and interregional pollution / Ferdi Dudenhöffer -- Environmental policy with pollution interaction / Alfred Endres -- Alternative allocation procedures for public goods / Wolfgang Blümel. |
| allocative efficiency definition economics: Reaping the Benefits of Financial Globalization Mr.Ayhan Kose, Mr.Julian Di Giovanni, Mr.Andre Faria, Mr.Martin Schindler, Mr.Giovanni Dell'Ariccia, Mr.Paolo Mauro, Mr.Jonathan David Ostry, Mr.Marco Terrones, 2008-12-16 Financial globalization has increased dramatically over the past three decades, particularly for advanced economies, while emerging market and developing countries experienced more moderate increases. Divergences across countries stem from different capital control regimes, and factors such as institutional quality and domestic financial development. Although, in principle, financial globalization should enhance international risk sharing, reduce macroeconomic volatility, and foster economic growth, in practice its effects are less clear-cut. This paper envisages a gradual and orderly sequencing of external financial liberalization and complementary reforms in macroeconomic policy framework as essential components of a successful liberalization strategy. |
| allocative efficiency definition economics: Matters of Principle Richard S. Markovits, 1998-07 The United States is generally believed to be a liberal, rights-based culture. In such a society, Richard S. Markovits asserts, arguments of moral principle are the dominant type of legitimate legal argument. Markovits analyzes various rights associated with our society's basic duties of showing appropriate, equal respect for all creatures capable of moral integrity and appropriate, equal concern for their actualizing this potential. Ranging widely and covering in depth such flashpoint issues as educational rights, minimum real-income rights, privacy rights, abortion, parenting, sexual liberties, and the right to die, Matters of Principle is a deeply engaged and thoughtful work, certain to be controversial and much debated. |
| allocative efficiency definition economics: The Economics of Property Rights: Property rights and economic performance Svetozar Pejovich, 2001 |
| allocative efficiency definition economics: A Primer on Efficiency Measurement for Utilities and Transport Regulators Tim Coelli, 2003 Annotation Options and guidelines for measuring the efficiency of recently privatized utilities (electricity, gas, water, sewerage, telecommunications, airports, ports, rail). |
| allocative efficiency definition economics: MICROECONOMICS, 4TH EDITION David Besanko, Ronald Braeutigam, 2011-08-01 Market_Desc: Business Professionals, Professors, and Students Special Features: · Makes the material accessible while helping readers build their problem-solving skills· Includes numerous new practice problems and exercises that arm them with a deeper understanding· Presents economic theories while boosting overall math skills through Learning by Doing exercises· Incorporates graphs throughout the mathematical discussions to reinforce the material· Offers a balanced approach to rigorous economics About The Book: Business professionals that struggle to understand key concepts in economics and how they are applied in the field rely on Microeconomics. The fourth edition makes the material accessible while helping them build their problem-solving skills. It includes numerous new practice problems and exercises that arm them with a deeper understanding. Learning by Doing exercises explore the theories while boosting overall math skills. Graphs are included throughout the mathematical discussions to reinforce the material. In addition, the balanced approach of rigorous economics gives business professionals a more practical resource. |
| allocative efficiency definition economics: The Evidence and Impact of Financial Globalization , 2012-12-31 The sharp realities of financial globalization become clear during crises, when winners and losers emerge. Crises usher in short- and long-term changes to the status quo, and everyone agrees that learning from crises is a top priority. The Evidence and Impact of Financial Globalization devotes separate articles to specific crises, the conditions that cause them, and the longstanding arrangements devised to address them. While other books and journal articles treat these subjects in isolation, this volume presents a wide-ranging, consistent, yet varied specificity. Substantial, authoritative, and useful, these articles provide material unavailable elsewhere. - Substantial articles by top scholars sets this volume apart from other information sources - Rapidly developing subjects will interest readers well into the future - Reader demand and lack of competitors underline the high value of these reference works |
| allocative efficiency definition economics: Handbook of Public Economics Martin Feldstein, A.J. Auerbach, 2002-01-25 The Field of Public Economics has been changing rapidly in recent years, and the sixteen chapters contained in this Handbook survey many of the new developments. As a field, Public Economics is defined by its objectives rather than its techniques and much of what is new is the application of modern methods of economic theory and econometrics to problems that have been addressed by economists for over two hundred years. More generally, the discussion of public finance issues also involves elements of political science, finance and philosophy. These connections are evidence in several of the chapters that follow. Public Economics is the positive and normative study of government's effect on the economy. We attempt to explain why government behaves as it does, how its behavior influences the behavior of private firms and households, and what the welfare effects of such changes in behavior are. Following Musgrave (1959) one may imagine three purposes for government intervention in the economy: allocation, when market failure causes the private outcome to be Pareto inefficient, distribution, when the private market outcome leaves some individuals with unacceptably low shares in the fruits of the economy, and stabilization, when the private market outcome leaves some of the economy's resources underutilized. The recent trend in economic research has tended to emphasize the character of stabilization problems as problems of allocation in the labor market. The effects that government intervention can have on the allocation and distribution of an economy's resources are described in terms of efficiency and incidence effects. These are the primary measures used to evaluate the welfare effects of government policy. |
| allocative efficiency definition economics: Monetarism and Liberalization Sebastian Edwards, Alejandra Cox Edwards, 1991-05-28 The successes and failures of free market policy in Chile, implemented in 1973 under the guidance of economists trained at the University of Chicago, are clearly explained in this well-written study. The authors argue that it was a combination of misjudgments, including important policy errors, that led to the collapse of the Chilean economy. The Edwards's book is an indispensable guide to the policy reforms and mistakes that have taken the [Chilean] economy to its present state.—Philip L. Brock, Money, Credit, and Banking This book is a 'must' for anybody interested in development economies and the problems of liberalization.—Hansjorg Blochliger, Journal of International Economics |
| allocative efficiency definition economics: Energy Analysis and Policy Mohan Munasinghe, 2013-10-22 Energy Analysis and Policy: Selected Works discusses the major aspect of electricity economics, including pricing, demand forecasting, investment analysis, and system reliability. This book provides a clear and comprehensive overview of the diversity of problems in analyzing energy markets and designing sound energy policies. Organized into 14 chapters, this book first discusses the energy economics in developing countries; integrated national energy planning (INEP) in developing countries; energy pricing; practical application of INEP using microcomputers; and energy strategies for oil-importing developing countries. Subsequent chapters describe the energy demand management and conservation; national energy policy implementation; energy demand analysis and forecasting; and energy project evaluation and planning. Other chapters explore non-conventional energy project analysis and national energy policy; rural energy issues and supply options; and bioenergy management policy. Rural-industrial energy and fossil fuel issues, as well as energy R&D decision-making in developing countries, are also presented. As the issues in this book are very important, this book will be helpful to a wide and appreciative audience. |
| allocative efficiency definition economics: Education as an Industry Joseph Froomkin, Dean T. Jamison, Roy Radner, 1976 |
| allocative efficiency definition economics: Economics John Beardshaw, 1998 This book contains a complete course in economics...such a thorough exposition..is ideal for A-level and Higher level courses, professional examinations and first year degree studentsEBEA Journal ( of the third edition)Economics: A Student's Guide is a highly acclaimed and well respected textbook. Throughout its previous three editions it has built up a loyal and committed following amongst students and instructors alike. Written in a student friendly and jargon free manner the book combines the strengths of traditional economics texts with modern, active learning methods.Building on the strengths of the previous editions the Fourth Edition has been thoroughly revised and updated taking account of the changes which have occurred in the teaching of economics, and in the economics market. The new edition takes a balanced, pluralistic approach, developing arguments and following them through, encouraging students to explore different schools of thought. Key Features: ? Comprehensive approach to welfare economics incorporating the environmental debate.? Expanded coverage of the global aspect of economics and the world economy.? Successfully spans both A-Level and Degree markets.? Ne |
| allocative efficiency definition economics: Economic Policy for a Free Society Henry Calvert Simons, 1948 |
| allocative efficiency definition economics: First Principles of Economics Richard G. Lipsey, Colin Harbury, 1992 Introduction to economics for complete beginners |
| allocative efficiency definition economics: Study Guide for Microeconomics William Walstad, 2011-01-26 This study guide should help you read and understand the McConnell, Bruce and Flynn textbook 'Microeconomics', 19th edition'--Page ix. |
| allocative efficiency definition economics: Principles of Economics Steven A. Greenlaw, Timothy Taylor, 2018-01-02 Please note: The color images and text in this textbook are grayscale. Principles of Economics covers the scope and sequence for a two-semester principles of economics course. The text also includes many current examples, including; discussions on the great recession, the controversy among economists over the Affordable Care Act (Obamacare), the recent government shutdown, and the appointment of the United States' first female Federal Reserve chair, Janet Yellen. The pedagogical choices, chapter arrangements, and learning objective fulfillment were developed and vetted with feedback from educators dedicated to the project. The outcome is a balanced approach to micro and macro economics, to both Keynesian and classical views, and to the theory and application of economics concepts. Current events are treated in a politically-balanced way, as well. |
| allocative efficiency definition economics: Evidence-Based Health Economics Miranda Mugford, 2014-05-28 This text recognises the need for evidence-based principles in economic evaluation, and that they should be based themselves on health economics. It discusses systematic review in economic analysis and suggests how to perform analyses in an evidence-based way. |
| allocative efficiency definition economics: Decent Work and Economic Growth Walter Leal Filho, Anabela Marisa Azul, Luciana Brandli, Amanda Lange Salvia, Tony Wall, 2020-10-20 The problems related to the process of industrialisation such as biodiversity depletion, climate change and a worsening of health and living conditions, especially but not only in developing countries, intensify. Therefore, there is an increasing need to search for integrated solutions to make development more sustainable. The United Nations has acknowledged the problem and approved the “2030 Agenda for Sustainable Development”. On 1st January 2016, the 17 Sustainable Development Goals (SDGs) of the Agenda officially came into force. These goals cover the three dimensions of sustainable development: economic growth, social inclusion and environmental protection. The Encyclopedia of the UN Sustainable Development Goals comprehensively addresses the SDGs in an integrated way. The Encyclopedia encompasses 17 volumes, each one devoted to one of the 17 SDGs. This volume addresses SDG 8, namely Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all and contains the description of a range of terms, to allow a better understanding and foster knowledge. The predominant economic model is promoting a lopsided economic growth that is further increasing the gap between the have and the have-nots. This SDG is not just proposing the attainment of more just and empowering economic models, but it also puts at the forefront the well-being of workers by striving to provide employment and better working conditions that respect the dignity of workers. Concretely, the defined targets are: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-Year Framework of Programmes on Sustainable Consumption and Production, with developed countries taking the lead Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value Substantially reduce the proportion of youth not in employment, education or training Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and end child labour in all its forms Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment Devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-related Technical Assistance to Least Developed Countries Develop and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organization Editorial Board Rimjhim M Aggarwal, Rosa Maria Fernandez, Edurne A. Inigo, Nerise Johnson, Dmitry Kurochkin, Wim Lambrechts, Sonja Rewhorn, Marco Tortora, Tony Wall |
| allocative efficiency definition economics: An Introduction to the Economics of Education Mark Blaug, 1976 |
What Makes Markets Allocationally Efficient? - JSTOR
1. Throughout the paper we refer to "allocative efficiency" as simply "effi-ciency." Allocative efficiency should not be confused with "informational efficiency" discussed in the accounting and …
1. Agri Sci - JASR - Comparative Analysis of Economic Efficiency
Allocative Efficiency Allocative efficiency measures the degree of correctness in the adoption of factor proportion to current input prices. A producer is allocative efficient if production occurs in …
Productivity and Efficiency Measurement in Agriculture
agricultural productivity and efficiency. This research starts with a literature review and gaps analysis on agricultural productivity and efficiency. Its first objective is to provide clear …
Allocative Efficiency and - Bank of Canada
to derive sufficient statistics for allocative efficiency and decompose aggregate productivity growth in a multi-sector economy with or without input-output linkages. We find that approximately two …
Taxation and Economic Efficiency - Ross School of Business
Taxation and Economic Efficiency Alan J. Auerbach University of California, Berkeley and NBER James R. Hines Jr. University of Michigan and NBER February 2001 This paper has been …
Harvey Leibenstein, and an anomaly called X-efficiency theory
form of efficiency, a non-allocative form. This non-allocative form was a violation of the then conventional wisdom. Allocative efficiency is an efficiency of the market when it is pressured …
Essential Graphs for Microeconomics - Weebly
Allocative Efficiency: Marginal Cost (MC) = Marginal Benefit (MB) Definition: Allocative efficiency means that a good’s output is expanded until its marginal benefit and marginal cost are equal. No …
The Structure of Technical Efficiency - JSTOR
overall) efficiency could be decomposed into the product of technical efficiency and allocative (or price) efficiency. He also showed how to measure productive efficiency and its two components, …
Assessing Technical, Allocative and Economic Efficiency of
inefficiencies among smallholder maize producers. Technical Efficiency (TE) estimates range from 40.6 percent to 96.53 percent with a mean efficiency of 78.19 percent, while Allocative …
Resource Allocation and ‘the Market’ - Health Economics
Lecture 5: Resource allocation and ‘the market’ This lecture should enable you to: qUnderstand the concept of ‘the market’ qExplain how markets relate to (allocative) efficiency qDescribe …
Economics AS Level Notes - StudyWise
PPC Graph Information: Productive Efficiency – Any point on the line Allocative Efficiency – Choosing between two points Eg.E A Unemployed Resources - Any point inside the curve Eg.X …
Edexcel (A) Economics A-level - Physics & Maths Tutor
met. This loss of allocative efficiency is a form of market failure. If there is a natural monopoly, it might be more efficient for only one firm to provide the good or service, since having duplicates …
Quick Reference Guide for Critical Appraisal of Economics …
CBA is used for both technical and allocative efficiency. This type of analysis can be used in health care as well as in other economic areas. Therefore, after determining to which type of study the …
Productivity Loss and Misallocation of Resources in Southeast …
allocative efficiency emphasize correcting or reducing market distortions. In this paper, we focus on the second source of productivity improvement, our analysis on resource concentrating …
Estimation of technical, economic and allocative efficiencies in
the small-scale sugarcane farmers suffer from considerable lack technical, allocative and cost efficiency. The mean technical, allocative and cost efficiency estimates are 68.5%, 61.5% and …
EFFICIENCY - wikieducator.org
people don’t need this would be allocative inefficient. Allocative efficiency occurs when the price of the good = the MC of production. A more precise definition of allocative efficiency is at an output …
Encyclopedia of Law & Economics - 2100 Nuisance | FindLaw
in economics - the effect of the property right distribution on allocative efficiency. It was pure happenstance that many of the examples used to illustrate his innovative ideas involved nuisance …
Natural Monopoly - Economics
- No allocative efficiency (P>MC) Title: Microsoft Word - NATMONOP.DOC Author: Rudolf Created Date: 5/31/2016 2:29:12 PM ...
An Examination of Technical, Economic, Allocative Efficiency …
technical efficiency (TE), allocative (cost) efficiency (AE), economic efficiency (EE) and income. Stratified random samples of 220 households were interviewed based on severity of salinity …
The Horizontal Merger Efficiency Fallacy - ineteconomics.org
of welfare” (economics), a theory that has been discredited and abandoned by welfare economists. In economic theory, efficiency means Pareto Efficiency. We explore the various attempts to …
Perfect Competition - Economics Help.org
Efficiency Of Perfect Competition 1. Allocative Efficiency This is because the long run equilibrium occurs where P = MC. 2. Productive Efficiency This is because firms produce at the lowest point …
Zwick Center for Food and Resource Policy Research Report …
Jul 7, 2017 · An important strand in the economics literature is the analysis of productivity and efficiency using frontier function methodologies. ... allocative efficiency (AE) measures the ability …
Assessment Schedule – 2018 Economics: Demonstrate …
NCEA Economics Level 3 (91399) 2018 — page 3 of 10 • There is a loss of allocative efficiency because there is a net welfare loss OR there is deadweight loss OR the sum of CS and PS is not …
Measuring Efficiency in Health Care - Cambridge University …
1.1 Efficiency measurement under constant returns to scale page 5 1.2 The case of two outputs 6 1.3 The case of two inputs 6 1.4 Allocative efficiency with two inputs 8 1.5 Allocative efficiency …
Sonia Sanjay Notes - StudyLast
Productive efficiency & allocative efficiency is achieved at pq Long run equilibrium = perfectly competitive firms is given by price & quantity Allocative efficiency: where price is equal to …
0730 THE COASE THEOREM - Findlaw
encompasses both the efficiency and the invariance propositions (reflected in the statements of the Theorem by Regan, Frech, Zerbe, and Hoffman and Spitzer, quoted above), and the ‘weak’ …
This document is discoverable and free to researchers across …
analysis, and welfare economics. These are partial measures of performance and, in the main, lack acceptable norms with which the performance of different markets can be compared and …
The University of Oxford Centre for Competition Law and …
allocative, productive and dynamic efficiencies.18 (a) Allocative efficiency The term allocative efficiency (or Pareto efficiency) relates to the effective allocation of resources and is deemed to …
AN INTRODUCTION TO EFFICIENCY AND PRODUCTIVITY …
3.6 Technical and Allocative Efficiencies 52 3.7 Input- and Output-Orientated Technical Efficiency Measures and Returns to Scale 55 3.8 Technical and Allocative Efficiencies from an Output …
the effectiveness and efficiency of public spending
Allocative efficiency reflects the link between the optimal combination of inputs taking into account costs and benefits6 and the output achieved. For instance to instruct pupils, there is a mix of …
TECHNICAL EFFICIENCY AND THE METHODS OF ITS …
short-term efficiency, is divided into economic efficiency, also called allocative, and technical efficiency related to type X efficiency and affecting dynamic efficiency. Economic efficiency …
The Quality Effect: Does Financial Liberalization Improve the ...
This study documents evidence of a "quality effect" of financial liberalization on allocative efficiency, as measured by dispersion in Tobin's Q across firms. ... Cho (1988)’s definition of …
X-Efficiency: From Concept to Theory - JSTOR
allocative added percent utilized research assistance. began bodyof reports aidteams These labor, used full full used in enterprises(in mentswere seemedclear of hy-of would as and that pursue …
On the Measurement of Productive Efficiency
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Efficiency in Resource Allocation - ResearchGate
allocative efficiency by the comparison of programs across the entire health sector. Implementation of the framework could form the basis for improved resource allocation.
Labor Mobility and Wages - National Bureau of Economic …
Labor mobility is one of the central topics of labor economics and a long-standing subject of empirical research. Earlier studies reflected primarily a concern with the allocative efficiency of …
UNIT 3 HEALTH ECONOMICS - eGyanKosh
3.2.1 Definition of Economics 3.2.2 Contribution of Hdth Economics to Health Planning 3.3 Economic Development and Health ... 3.8.3 Allocative Efficiency 3.9 Demand, Supply, Elasticity …
Glossary of Terms for Health Economics and Systematic Review
Allocative efficiency refers to decisions about the distribution of resources across a range of interventions within a given system; interventions compete with each other for implementation. …
Production Economics-Meaning & Definition, Nature and …
Definition: Production economics is the application of the principles of microeconomics in production. Based on the theory of firm, these principles explain various cost concepts, ...
Welfare Economics Explained | Definitions | Theorem | Types ...
1. Allocative Efficiency: Allocative efficiency occurs when resources are distributed in a way that maximizes overall societal welfare. In other words, it's the point at which the allocation of goods …
ECONOMICS Module 8: Market failure and functions of …
directly involved in market exchange. Market failure in short implies a loss of allocative efficiency or a situation in which the allocation of goods and services is not efficient. In such a situation, the …
Economic Efficiency Analysis in Côte d’Ivoire
A definition of the allocative efficiency is in the article of Rodriguez-Alves, Tovar and Trujillo (2007). They consider that the allocative efficiency puts in relation the inputs utilizations by the …
Efficiency in government - National Audit Office
Efficiency gains can also be realised by focusing resources on those activities with the best ratio of costs to the benefits achieved where this can be calculated (‘allocative’ efficiency) (Figure 3 on …
6. THE EFFICIENCY EFFECTS OF TAXATION - Springer
technical efficiency is less important than allocative efficiency. Results presented in this section suggest that the technical efficiency losses arising from taxation are very large. While this …
Centre for Efficiency and Productivity Analysis - University of …
technical change and/or efficiency change. Section 4 is used to show that important measures of technical, scale and mix efficiency can be defined in terms of quantity aggregates. Measures of …
5: Perfect competition, imperfectly competitive markets and …
x definition of competitive market x features of competitive market x increase in market supply leads to a reduction in price, which individual firms are obliged to take 5 Correct diagram: …
