Idiosyncratic risk and X-inefficiency: Difference between pages
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A term from economics referring to a firm's tendency not to maximise output from its installed equipment, systems, personnel as simple economic theory might suggest. It is often explained by agency costs as managers pursue their own objectives not the interests of shareholders, staff extracting rent for themselves, etc. But sheer human failing may also be important. | |||
X-inefficiency may also be applied by extension to an industry or to a whole regional or national etc. economy. | |||
An X-efficient firm may, of course, not be allocatively efficient - producing the "right" outputs using the best mix of inputs to produce them. | |||
Leibenstein,Harvey("Allocative Efficiency vs. X-Efficiency", American Economic Review 56(3), June 1996, pp 392–415 is normally taken as the source of the term X-efficiency. | |||
Revision as of 10:27, 20 September 2013
A term from economics referring to a firm's tendency not to maximise output from its installed equipment, systems, personnel as simple economic theory might suggest. It is often explained by agency costs as managers pursue their own objectives not the interests of shareholders, staff extracting rent for themselves, etc. But sheer human failing may also be important.
X-inefficiency may also be applied by extension to an industry or to a whole regional or national etc. economy.
An X-efficient firm may, of course, not be allocatively efficient - producing the "right" outputs using the best mix of inputs to produce them.
Leibenstein,Harvey("Allocative Efficiency vs. X-Efficiency", American Economic Review 56(3), June 1996, pp 392–415 is normally taken as the source of the term X-efficiency.
