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Topic: Allocative efficiency

Ads by Google      Allocative efficiency - Wikipedia, the free encyclopedia A firm is allocatively efficient when its price is equal to its marginal costs (that is, P = MC). A firm is allocatively efficient when its price is equal to its marginal costs (P=MC) A market will be allocatively efficient if it is producing the right goods for the right people at the right price. An allocatively efficient market is therefore one which has no imperfections. http://en.wikipedia.org/wiki/Allocative_efficiency   (256 words)      Inefficiency - Wikipedia, the free encyclopedia For example, a company may have the lowest costs in "productive" terms, but the result may be inefficient in allocative terms because the "true" or social cost exceeds the price that consumers are willing to pay for an extra unit of the product. Allocative inefficiency - Allocative efficiency theory says that the distribution of resources between alternatives does not fit with consumer taste (perceptions of costs and benefits). We could do a better job if we applied deficit spending or expansive monetary policy. http://en.wikipedia.org/wiki/Inefficiency   (502 words)      Allocative Efficiency Allocative efficiency in a given market involves comparing the cost of producing an extra unit – marginal cost - with the benefit gained from its consumption – marginal benefit. Identifying allocative efficiency involves comparing the cost of producing an extra unit with the benefit gained from its consumption. Allocative efficiency occurs when firms produce those goods and services most valued by society. http://www.woodgreen.oxon.sch.uk/economics/allocative_efficiency.htm   (284 words)      [No title] Allocative efficiency was not a motivating factor, but productive efficiency was a goal of legislators on both sides of the debates. The concept of allocative efficiency does not figure significantly in the legislative record and no significant evidence exists that Congress was willing to forego its market power concerns in order to increase corporate efficiency. Although the precise role that efficiency was intended to play in Clayton Act analyses is unclear, the debates suggest that this Act, like the Sherman and FTC Acts, is primarily concerned with the efficiency benefits directly passed through to consumers. http://home.ubalt.edu/NTLALAND/WealthTransferHastings1982.doc   (19162 words)      [No title]  Note that the mean efficiencies in table 3 are calculated as the average of the plant specific estimates of the efficiencies, not as the efficiencies calculated at the mean values of the data. Results We have noted the productive efficiency is the product of technical efficiency and allocative efficiency of a firm and the reciprocal of input distance function is a measure of technical efficiency. Allocative Efficiency Price efficiency is attained if all marginal rates of technical substitution (MRTS) are equated to the corresponding ratios of market prices for inputs. http://weber.ucsd.edu/~carsonvs/papers/45.DOC   (2389 words)      [No title] If a firm is very productively efficient but charges prices grossly inefficient from an allocative perspective, it creates an opportunity for a smaller firm to enter so long as the benefit to consumers of the allocative efficiency (lower prices) does not outweigh the harm due to loss of productive efficiency (higher costs). Everyone knows that average cost pricing isn't good enough for allocative efficiency; we must have marginal cost pricing for that. These must be barriers that are not forms of superior efficiency and which yet prevent the forces of the market -- entry or the growth of smaller firms already within the industry -- from operating to erode market positions not based on efficiency. http://www.gmu.edu/departments/economics/bcaplan/compet   (9701 words)      HSD/Allocative Efficiency - Key Topics Found that concern for allocative efficiency and health maximization, as usually envisaged by economists, is not completely shared by the general population, and that a cost-effectiveness approach to setting resource allocation priorities may therefore impose an 'excessively simple value system' on the decision process. Suggests that in market settings, there may be an inverse relationship between technical and allocative efficiency, with the former tending to improve and the latter to worsen (as a result of market-driven changes in the intervention mix). Begins with a brief discussion of the allocative and technical inefficiencies and inequity of the health sector in developing countries, then discusses each of the four proposed reforms with regard to these. http://wbln0018.worldbank.org/HDNet/hddocs.nsf/c840b59b6982d2498525670c004def60/37f1b0207cf04e3385256a9c0064002e?OpenDocument&ExpandSection=3   (7260 words)      AgBioForum 5(1): Efficiency of Alternative Technologies and Cultural Practices for Cotton in Georgia Price (allocative) efficiency is the extent to which a firm uses the inputs in the best proportions, given their prices. Similar to allocative efficiency, the general result is that adoption of transgenic cotton varieties and conservation tillage has potential for increasing technical efficiency as well as financial returns. Allocative efficiency measures include respective prices for each input variable. http://www.agbioforum.org/v5n1/v5n1a03-ward.htm   (1770 words)      The Road Not Taken, By Francis J. Cronin and Stephen A. Motluk, March 2004 Allocative inefficiency is benchmarked by using total cost comparisons, not just data on changes in output/input ratios. Indeed, in an unregulated market, the profits of the most efficient utility would be determined by its cost level relative to the cost level of less efficient utilities. Third, we find significant differences in calculated efficiency between the partial-cost approach and one based on total costs, which produces a better estimate of both technical and allocative efficiency. http://www.pur.com/pubs/4343.cfm   (2547 words)      Financing health systems through efficiency gains It is argued that the tradition of concentrating on allocative efficiency, and more specifically on cost-effectiveness analysis, fails to account for the shortcomings of the economics of health systems in poorer countries. technical and economic efficiency are prerequisites to allocative efficiency; however, allocation decisions will be required for the resources released by improved technical and economic efficiency. Alternative ways of measuring technical efficiency are then reviewed as well as the potential savings their elimination could incur. http://www.eldis.org/static/DOC14214.htm   (527 words)      [No title] Allocative efficiency means that resources are being used to produce the goods and services most wanted by society. Defense spending is reduced to allow government to spend more on health care. Illustrate economic growth, unemployment and underemployment of resources, allocative and productive efficiency, and increasing costs using a production possibilities curve. http://staffwww.fullcoll.edu/aturner/Chap002.doc   (4179 words)      lec1 One of the issues in public policy is whether and under what circumstances government action can increase the allocative efficiency of market outcomes. Since the majority of real world markets are not perfectly competitive, the possibility exists for the government to use public policy to promote greater efficiency in real world markets. Allocative efficiency: Firm maximizes profit where MR = MC and P >MR therefore P >MC. http://lamar.colostate.edu/~alex/EC202H/lec16.html   (928 words)      Health Economics Information Resources: A Self-Study Course: Module 4 CUA can be used for allocative efficiency but only within the health care sector where health care costs only are included. Cost benefit analysis is used to measure allocative efficiency. Over three years, and despite an inflation rate of 5%, by adjusting costs for the rate of inflation the two treatments are shown to be _________ in terms of resources used. http://www.nlm.nih.gov/nichsr/edu/healthecon/04_he_review.html   (1343 words)      Economic Efficiency [ Biz/ed Virtual Developing Country ] A productively efficient firm organises its factors of production in such a way that the average cost of production is at lowest point. The greater the competition, the closer the price the firm is able to charge will be to the marginal costs of the firm. The price paid for a good or service is a measure of the benefit that a consumer derives from consumption of one more unit of that good or service. http://www.bized.ac.uk/virtual/dc/copper/theory/th4.htm   (840 words)      MONOPOLY AND X- EFFICIENCY As well as allocative efficiency, perfect competition leads to productive efficiency (minimum average cost production, in other words), since above minimum average cost selling would mean zero sales. The concept of X-Efficiency rejects the technical efficiency notion of profit maximising and cost minimising. Due to extra market power, the monopolist restricts quantity, sells at a higher price and earns supernormal profits. http://www.maths.tcd.ie/pub/econrev/ser/html/morton.html   (1847 words)      [No title] One solution suggested to improve efficiency is to privatize DoD's maintenance depots (i.e., contract for service with private sector, profit making maintenance providers). I do not expect you to understand technical/allocative efficiency to this level of detail (particularly how perfect competition ensures technical/allocative efficiency), or derive the impacts of percentage taxes/subsidies, but I have included these problems to help explain these concepts. Define what maximizing technical and allocative efficiency in operating a maintenance depot means. http://web.nps.navy.mil/~brgates/documents/micropsets/problem411-28-01.doc   (1083 words)      [No title] Productive (Technical) Efficiency Technical efficiency occurs when resource are being used in their most economical way. Allocative Efficiency As shown above, the imperfectly competitive firm restricts output because it is in its own private best interest. If Q increases beyond QM (P > MC for units QM to QC (Consumers are willing to pay more for additional units of the good than the opportunity cost (MC) of producing those additional units. http://www.class.csupomona.edu/ec/aebres/ec201/efficiency.doc   (289 words)      [No title] If the markets are competitive, the answer often is “yes.” Allocative efficiency For allocative efficiency, goods and services should be produced only if their marginal benefit is greater than or equal to marginal cost. Draw a graph to explain and illustrate why allocative efficiency occurs where the MB (or demand) and MC (or supply) curves intersect. Since the units past Q0 cost more than they are worth to consumers at the margin, they generate a net loss to society. http://faculty.winthrop.edu/stonebrakerr/book/efficiency.doc   (533 words)      Allocative efficiency exercise The highway department wants to allocate its limited resources efficiently, which means it wants to fund the mix of traffic light and guard rail projects that yields the most total benefit. To allocate resources efficiently between two competing uses, you had to apply the net benefit rule. What is the most total benefit that can be gained from using the $100,000 only for equipping intersections with traffic lights? http://www.cat.cc.md.us/~ryentzer/exercise_aloceff.htm   (454 words)      Law and Economics [Internet Encyclopedia of Philosophy] Further, it is argued that while such concepts are unhelpfully complex, the tools of economic analysis and the concept of economic efficiency are sufficiently clear to provide the judge a solid and predictable basis of decision. A more efficient allocation is one that increases the net value of resources. In other words, the Coase Theorem states that if there are no transaction costs the assignment of entitlements will be irrelevant to the goal of allocative efficiency. http://www.iep.utm.edu/l/law-econ.htm   (3454 words)      Indian Journal of Medical Research: Policy tools for allocative efficiency of health services The author has attempted to identify policy tools that might have an effect on the allocative efficiency of health care provision in terms of how they affect the type of services provided, who provides them, how the services are provided, and who the beneficiaries are. The book is well written, informative and provides a scholarly analysis of tools primarily aimed at cost containment and its possible secondary effects on allocative efficiency. The Global Programme on Evidence for Health Policy (GPE) of the WHO is assembling regional databases on the costs, impact on population health, and cost effectiveness of key health interventions. http://www.findarticles.com/p/articles/mi_qa3867/is_200411/ai_n9466358#   (336 words)      SSRN-The Allocative Efficiency Measure by Means of a Distance Function: The Case of Spanish Public Railways by José ... These shadow prices are used to calculate the degree of allocative inefficiency of the firm and the origin of this inefficiency by using a parametric correction of prices (kij). The distance function, which is the dual of the cost function, completely describes the technology and, like the cost function, it allows a multiproduct analysis. The Allocative Efficiency Measure by Means of a Distance Function: The Case of Spanish Public Railways http://papers.ssrn.com/sol3/papers.cfm?abstract_id=549503   (328 words)      Elasticity of Supply and Allocative Efficiency In re # 2: Static or allocative efficiency is the property of a competitive market equilibrium where marginal cost of producing additional output = p* = marginal willingness to pay for additional output. Or, put another way, its how much suppliers are willing to change the amount they provide to the market with the price at which they sell their output changes. In re #1: Start with the general definition of elasticity: % change in quantity/ % change in price. http://fhss.byu.edu/econ/faculty/Kearl/w1.htm   (189 words)      EconPort - Online Resources The concepts illustrated by the sessions are 1) the greater efficiency of resource allocation in a market economy as compared to a command economy, 2) the role of information in the efficient allocation of resources, and 3) that institutions matter. Unsure of whether their new attributes will entitle them to a fair share of the quiz-taking resources, students often strive to redistribute them as equally as possible, even at the expense of efficiency. Economic Efficiency and the Role of Prices: Market Sessions for Use in Classrooms http://www.econport.org:8080/econport/request?page=web_or_list&categoryID=3   (1628 words)      Toward Allocative Efficiency in the Prescription Drug Industry Given the allocative inefficiency of raising taxes to pay for the program, the impact of the proposal on allocative efficiency would be at least as good at our lower bound estimate of monopoly costs while substantially improving efficiency at or near our upper bound estimate. A proposed system would have the U.S. government employing its power of eminent domain to "take" and distribute pharmaceutical patents, providing as "just compensation" the present value of the patent's expected future monopoly profits. Traditionally, monopoly power in the pharmaceutical industry has been measured by profits. http://www.milbank.org/730204.html   (152 words)      EconPapers: Technological change, technical and allocative efficiency in Chinese agriculture During the second phase reforms which was supposed to focus on the liberalization of rural markets, technical efficiency improved very little and allocative efficiency has increased only slightly, however. Abstract: This paper develops a frontier shadow cost function approach to estimate empirically the effects of technological change, technical and allocative efficiency improvement in Chinese agriculture during the reform period (1980-93). The results reveal that the first phase rural reforms (1979-84) which focused on the decentralization of the production system have had significant impact on technical efficiency but not allocative efficiency. http://econpapers.repec.org/paper/fpreptddp/39.htm   (219 words)      X-efficiency - Wikipedia, the free encyclopedia X-efficiency is also known as Technical efficiency and is the set of all points lying on the firm's production possibility frontier.It is simply how effective the firm is using its resources given the budget or more appropriately cost restrictions. In a market with perfect competition, there will in general be no x-inefficiency because if any firm is less efficient than the others it will not make sufficient profits to stay in business in the long term. It doesn't take account of whether the inputs are the best ones to be using, or whether the outputs are the best ones to be producing, which is referred to as allocative efficiency. http://en.wikipedia.org/wiki/X-efficiency   (298 words)      [No title] Bottom line: PC markets are economically efficient but monopoly markets are not. Monopoly: Is productively efficient since the firm produces at lowest cost * The meaning of efficiency in economics is: Resources are not wasted. http://lamar.colostate.edu/~alex/ec102/lectures/s102lec16.htm   (647 words)      Microeconomics: Paper 3 Outline Is this quantity (goal of businesses) the same as the allocatively efficient quantity? Discuss the role of prices and profits in productive efficiency. Use supply and demand graphs clearly labeled with MARGINAL SOCIAL BENEFITS and MARGINAL SOCIAL COSTS to illustrate allocative efficiency. http://www.harpercollege.edu/~mhealy/eco211/paper3.htm   (148 words)      Outline In Pure Competition (in the long run) allocative efficiency is guaranteed. **** Therefore, production efficiency is guaranteed in pure competition in the long run. Long-run Average Total Cost Curve (LR ATC curve): http://webpages.marshall.edu/~agesaj/week12_250.html   (675 words)      [No title] Since all firms take the same price, all firms have same MC (why?) There is no way to re-direct production to other firms and get lower marginal costs. There is no way to cut costs by changing plant size. PS = Revenue - total variable costs.ó  Ÿ 2Producers Surplus-MarketŸ  ( Selling 4 units @$6/unit. Total revenue = B + C. TVC for all firms is represented by the area under the SRS curve (why?) = C B = producers surplus¡••ó  Ÿ¨Allocative Efficiencyª  Ÿ  ^ A + B = T http://www.people.vcu.edu/~smitchel/210/lec16bw.ppt   (182 words)      [No title] (Q) In words, maximum net benefit (allocative efficiency) is achieved when the marginal benefit minus the marginal cost of pizza is zero; or alternatively, when the marginal benefit of pizza equals its marginal cost. The optimal quantity of pizza production is achieved when the difference between the pizzas' total benefits and total costs is greatest. If we define the net benefits of pizza as NB(Q) = B(Q) -C(Q), allocative efficiency is achieved at the output which maximizes NB(Q). http://www.mcgrawhill.ca/college/olcsupport/mcconnell9/domath/allocativeefficiency.html   (106 words)      ch5tx this will be the quantity where society's Satisfaction will be maximized or the allocatively efficient quantity Markets Causing Allocative Inefficiency and the Role of Government In a market economy with no spillover benefits and no spillover costs: http://www.harpercollege.edu/mhealy/eco212/lectures/govtfcns/ch5.htm   (243 words)      Pareto Efficiency Quiz 6) The necessary condition for allocative efficiency is that each commodity be produced in an amount that makes the marginal benefit to society of the last unit produced equal to the marginal cost to society of that last unit. d) holds that the allocation of resources generated by a complete system of perfectly competitive markets is Pareto efficient. d) allocative efficiency, productive efficiency, and distributive efficiency. http://econweb.rutgers.edu/blair/102/olquiz/pareffqz/pareffqz.htm   (616 words)      Allocative efficiency Allocative efficiency requieres that an economy provide its members with the amounts and types of goods and services that they most prefer. In standard economic theory it occurs when resources are allocated in such a way that any change to the amounts or types of outputs currently being produced (which might make someone better off) would make someone worse off. http://www.lachsr.org/en/thesaurus/00002021.htm   (72 words)      Allocative Efficiency Allocative efficiency exists when no resources are wasted. In this case, no one can be made better off without making someone worse off. http://www.econ.iastate.edu/classes/econ101/merrill/fall97/chap11/sld020.htm   (23 words)      Services - Allocative Efficiency Administrative Efficiency: Administering programs and collecting revenues at minimum cost. By using data on past intervention costs for specific health conditions, future costs can be predicted in similar scenarios. The hypothesis behind the Fund Recovery Solutions Allocative Efficiency Model relies upon an economic based theory that a reduction in health care costs reflects a reduction in need for treatment. http://www.fundrecovery.biz/AllocativeEfficiency.html   (165 words)      Publications List "The Allocative Efficiency of Shifting from a "Negligence" System to a "Strict-Liability" Regime in Our Highly-Pareto-Imperfect Economy: A Partial and Preliminary Third-Best-Allocative-Efficiency Analysis," 73 CHICAGO-KENT LAW REVIEW 11 (1998). "Legal Analysis and the Economic Analysis of Allocative Efficiency," 8 HOFSTRA LAW REVIEW 811 (1980). "Legal Analysis and the Economic Analysis of Allocative Efficiency: A Response to Professor Posner's Reply," 11 HOFSTRA LAW REVIEW 667 (1983). http://www.utexas.edu/law/faculty/rmarkovits/publist.htm   (953 words)      SSRN-Aggregation of Productivity Indices: The Allocative Efficiency Correction by Thijs ten Raa Industry productivity is obtained by aggregation of firm productivities and inclusion of the appropriate allocative efficiency terms, one for each firm.This paper identifies the latter correction terms. Aggregation of Productivity Indices: The Allocative Efficiency Correction SSRN-Aggregation of Productivity Indices: The Allocative Efficiency Correction by Thijs ten Raa http://papers.ssrn.com/sol3/papers.cfm?abstract_id=570147   (113 words)      Allocative Efficiency in Russian Agriculture: The Case of Fertilizer and Grain (ResearchIndex) We use the results to examine whether fertilizer is being used at its optimal level, and whether the major changes in the volumes of fertilizer use and trade during transition have been economically rational (Update) Abstract: This paper examines the allocative efficiency of Russian use of mineral fertilizer to produce grain, assessed from the point of view of both domestic and trade prices. Allocative Efficiency in Russian Agriculture: The Case of Fertilizer and Grain (2003) http://citeseer.ist.psu.edu/580580.html   (216 words)      ipedia.com: Efficiency (economics) Article There are several measures of economic efficiency : Pareto efficiency Kaldor-Hicks efficiency X-efficiency Allocative efficiency See also inefficiency. http://www.ipedia.com/efficiency__economics_.html   (54 words)      [No title] An index of allocative efficiency is AE EMBED Equation.3  The firm is allocatively efficient if AE = 1. The firm is said to be technically efficient if (x, y) is on the production frontier: y = f(x). And since positive (negative) profit gives incentives for entries (exits) in the industry, scale inefficiency is necessarily associated with the absence of a long run equilibrium. http://www.aae.wisc.edu/aae733/notes/a03effic.doc   (199 words)      AREC - Faculty Profile Allocative Efficiency in Russian Agriculture, American Journal of Agricultural Economics, 85 (2003): 1228-1233. http://www.arec.umd.edu/bgardner   (535 words)      EconPapers: Heterogeneous Beliefs, Intelligent Agents, and Allocative Efficiency in an Artificial Stock Market I analyze the portfolio returns and stock returns from this market to see whether the market exhibits characteristics cited in the empirical literature, including volatility persistence, GARCH, portfolio performance evaluation and allocative efficiency. Heterogeneous Beliefs, Intelligent Agents, and Allocative Efficiency in an Artificial Stock Market EconPapers: Heterogeneous Beliefs, Intelligent Agents, and Allocative Efficiency in an Artificial Stock Market http://econpapers.repec.org/paper/scescecf9/612.htm   (395 words)      Allocative Efficiency in Russian Agriculture: The Case of Fertilizer and Grain Allocative Efficiency in Russian Agriculture: The Case of Fertilizer and Grain "Allocative Efficiency in Russian Agriculture: The Case of Fertilizer and Grain" You are here: Home / Publications / ERS Elsewhere / Allocative Efficiency in Russian Agriculture: The Case of Fertilizer and Grain http://www.ers.usda.gov/publications/ERSelsewhere/eejs0405   (349 words)      [No title] Badi, Baltagi and Dong Li, "Series Estimation of Partially Linear Panel Data Models with Fixed Effects," Annals of Economics and Finance, Vol. Chang, Yang-Ming, and John T. Warren, "Allocative Efficiency and Diversification under Price-cap Regulation," Information Economics and Policy, Vol. Weisman, Dennis and J. Pfeifenberger, "Efficiency as a Discovery Process: Why Enhanced Incentives Outperform Regulatory Mandates." The Electricity Journal, Vol. http://www.k-state.org/economics/recentpub.htm   (3282 words)

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