Configuration Efficiency X-Efficiency and State-Owned Enterprise Reform

Author: Huo Yanbin
Publisher:
Publish Date: 2002-10-01
Features: After the 1930s, economists' focus on efficiency almost exclusively shifted to allocative efficiency. To most economists, efficiency meant a Pareto-efficient allocation, while inefficiency was the result of deviations from Pareto equilibrium, leading to allocative inefficiency. Although inefficiency is widespread in reality, most economists persist in the belief that individuals pursue utility maximization, firms pursue profit maximization, and governments pursue social welfare maximization. Under the assumption that all market participants pursue maximization, inefficiency still exists, and it is therefore naturally defined as allocative inefficiency. After the 1930s, economists' focus on efficiency almost exclusively shifted to allocative efficiency. To most economists, efficiency meant a Pareto-efficient allocation, while inefficiency was the result of deviations from Pareto equilibrium, leading to allocative inefficiency. Although inefficiency is widespread in reality, most economists persist in the belief that individuals pursue utility maximization, firms pursue profit maximization, and governments pursue social welfare maximization. Under the assumption that all market participants pursue maximization, inefficiency still exists, and it is therefore naturally defined as allocative inefficiency.