X-efficiency

X - efficiency is a concept in economics and refers to the efficiency with which a given set of inputs (eg labor, capital, etc. ) for the production of an output (product) is being used. Produces an entity with the given resources such as machinery, technology, employees etc. the maximum output, it produces x - efficient, it produces less than the maximum output, it produces x - inefficient.

In the neoclassical theory under the condition of perfect competition all firms produce by definition x - efficient because every company that produces less efficient than another, can not maintain itself in the long term in the market.

Harvey Leibenstein sought to have that explained in many interesting economic situations allocative inefficiency taken alone only very little of the executed undertaken welfare losses. The non- allocative component, however, which explains the predominant rest, he called X - inefficiency. With this concept he named the problem, in his opinion, an even greater relevance than has the allocative efficiency with which the micro-economics has been employed alone, namely: to determine the reasons for these hitherto unexplained residual theory.