Inefficiency - Wikipedia

The term inefficiency generally refers to an absence of efficiency. It has several meanings depending on the context in which it is used:. Inefficiency FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch LookupinefficiencyinWiktionary,thefreedictionary. Theterminefficiencygenerallyreferstoanabsenceofefficiency.Ithasseveralmeaningsdependingonthecontextinwhichitisused: Allocativeinefficiency-Allocativeefficiencyreferstoasituationinwhichthedistributionofresourcesbetweenalternativesdoesnotfitwithconsumertaste(perceptionsofcostsandbenefits).Forexample,acompanymayhavethelowestcostsin"productive"terms,buttheresultmaybeinefficientinallocativetermsbecausethe"true"orsocialcostexceedsthepricethatconsumersarewillingtopayforanextraunitoftheproduct.Thisistrue,forexample,ifthefirmproducespollution(seealsoexternalcost).Consumerswouldpreferthatthefirmanditscompetitorsproducelessoftheproductandchargeahigherprice,tointernalizetheexternalcost. DistributiveInefficiency-referstotheinefficientdistributionofincomeandwealthwithinasociety.Decreasingmarginalutilitiesofwealth,intheory,suggeststhatmoreegalitariandistributionsofwealtharemoreefficientthaninegalitariandistributions.Distributiveinefficiencyisoftenassociatedwitheconomicinequality. Economicinefficiency-referstoasituationwhere"wecouldbedoingabetterjob,"i.e.,attainingourgoalsatlowercost.Itistheoppositeofeconomicefficiency.Inthelattercase,thereisnowaytodoabetterjob,giventheavailableresourcesandtechnology.Sometimes,thistypeofeconomicefficiencyisreferredtoastheKoopmansefficiency.[1] Keynesianinefficiency-mightbedefinedasincompleteuseofresources(labor,capitalgoods,naturalresources,etc.)becauseofinadequateaggregatedemand.Wearenotattainingpotentialoutput,whilesufferingfromcyclicalunemployment.Wecoulddoabetterjobifweapplieddeficitspendingorexpansionarymonetarypolicy. Paretoinefficiency-Paretoefficiencyisasituationinwhichonepersoncannotbemadebetteroffwithoutmakinganyoneelseworseoff.Inpractice,thiscriterionisdifficulttoapplyinaconstantlychangingworld,somanyemphasizeKaldor-Hicksefficiencyandinefficiency:asituationisinefficientifsomeonecanbemadebetteroffevenaftercompensatingthosemadeworseoff,regardlessofwhetherthecompensationactuallyoccurs. Productiveinefficiency-saysthatwecouldproducethegivenoutputatalowercost—orcouldproducemoreoutputforagivencost.Forexample,acompanythatisinefficientwillhavehigheroperatingcostsandwillbeatacompetitivedisadvantage(orhavelowerprofitsthanotherfirmsinthemarket).SeeSicklesandZelenyuk(2019,Chapter3)formoreextensivediscussions. Resource-marketinefficiency-referstobarriersthatpreventfulladjustmentofresourcemarkets,sothatresourcesareeitherunusedormisused.Forexample,structuralunemploymentresultsfrombarriersofmobilityinlabormarketswhichpreventworkersfrommovingtoplacesandoccupationswheretherearejobvacancies.Thus,unemployedworkerscanco-existwithunfilledjobvacancies. X-inefficiency-referstoinefficiencyinthe"blackbox"ofproduction,connectinginputstooutputs.Thistypeofinefficiencysaysthatwecouldbeorganizingpeopleorproductionprocessesmoreeffectively.Oftenproblemsof"morale"or"bureaucraticinertia"causeX-inefficiency. Productiveinefficiency,Resource-marketinefficiency,andX-inefficiencymightbeanalyzedusingDataEnvelopmentAnalysisandsimilarmethods. Seealso[edit] Efficiency(disambiguation) References[edit] ^Sickles,R.,&Zelenyuk,V.(2019).MeasurementofProductivityandEfficiency:TheoryandPractice.Cambridge:CambridgeUniversityPress.doi:10.1017/9781139565981 Retrievedfrom"https://en.wikipedia.org/w/index.php?title=Inefficiency&oldid=925487210" Categories:EconomicefficiencyWasteofresources Navigationmenu Personaltools NotloggedinTalkContributionsCreateaccountLogin Namespaces ArticleTalk Variants expanded collapsed Views ReadEditViewhistory More expanded collapsed Search Navigation MainpageContentsCurrenteventsRandomarticleAboutWikipediaContactusDonate Contribute HelpLearntoeditCommunityportalRecentchangesUploadfile Tools WhatlinkshereRelatedchangesUploadfileSpecialpagesPermanentlinkPageinformationCitethispageWikidataitem Print/export DownloadasPDFPrintableversion Languages БългарскиTürkçe Editlinks