Allocational efficiency

Allocational efficiency

The effectiveness with which a market channels capital toward its most productive uses.

Allocational Efficiency

A condition in a market when all capital and other resources are assigned to projects with the highest profitability. Allocational efficiency is thought to benefit all economic actors to the greatest possible extent. In an environment of allocational efficiency, only the projects with the highest potential profitability receive funding and then only in the precise amount that is needed. Allocational efficiency assumes that the market is already informational and operationally efficient, that is, that all pertinent knowledge is public and non-income producing expenses (i.e. fees) are reasonably priced or non-existent. An allocatively efficient market has no imperfections and therefore does not exist in practice. However, markets can contain it to a greater or lesser extent. See also: Market failure.
References in periodicals archive ?
These authorities tend to focus more on investor protection than on the allocational efficiency of the markets they oversee.
Allocational efficiency requires that resources are allotted to the most deserving and productive segment of the population.
We can also examine the allocational efficiency of our markets.
Another aspect of allocational efficiency is the proportion of eligible and ineligible shares held by the unrestricted investors.
Conditional on the relative preset price and the policy instrument, consumption is determined by (22); the relative flexible price is determined by (14); allocational efficiency is determined by (18); and marginal cost is determined by (13) and (22).
But with stable prices, [pi] = 1, the derivative of allocational efficiency with respect to [p.
When the issue is health insurance or retirement security, allocational efficiency is really not what's under discussion.
Tertiary education in Austria has been found costly and its allocational efficiency needs to be improved to cope with a widening gap in skills provided and demanded.
Whether it is the debates within Congress or the frequent expressions of courts, the incantations regarding the broad objective of the securities laws are the same: to provide full and fair disclosure for the protection of investors and to enhance the allocational efficiency of U.
Financial markets, therefore, facilitate allocational efficiency.
In the first study, the authors find that a computerized double auction performs better than the alternative institutions in terms of allocational efficiency and speed of price convergence, with the exception of possibly superior performance by a recontracting version of the clearinghouse institution.
Allocational efficiency depends in part on the relative bargaining strengths of the participants.