Distributive efficiency financial definition of distributive efficiency
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distributive efficiency an aspect of MARKET PERFORMANCE that denotes the EFFICIENCY of a market in distributing its outputs from suppliers to consumers. The costs of distribution include transport, storage and handling expenses, together with the distributor's profit margins. In addition, suppliers incur SELLING COSTS (ADVERTISING and other PRODUCT DIFFERENTIATION expenditures) in creating and sustaining a demand for their products. Optimal distributive efficiency is achieved when physical distribution costs are minimized and selling costs are maintained at the minimum level to sustain total market demand.