The estimated inefficiency
for a given university, E = exp.
Here Ei showed the inefficiency
score, ss was for unknown factors and Zi was for socioeconomic as well as farm-specific variables.
The equation for measuring allocative inefficiency
for the macro economy is [([DELTA]P[DELTA]Q/2)(% of national income produced by industries creating the misallocation)].
It follows that cost inefficiency
(CIE) is described by bc/Oc and allocative inefficiency
(AEI) is ab/Oa.
We dub the latter the "bottom-up" inefficiency
triangle to highlight that it results from actual bottom-up market dynamics--in particular, from the random allocation of demand-limited jobs to willing workers.
The authors use data from the Statistical Yearbook [United Nations, various], International Financial Statistics [International Monetary Fund (JMF), various], and the Demographic Yearbook [United Nations, various] to test for dynamic inefficiency
While the first method has been criticized as including too much in the estimate of firm inefficiency
, the second has been criticized for the strong assumptions needed in separating the stochastic from the systematic inefficiency
components in the error.
Because estimation of a translog cost function averaged out the dispersion among institutions, it understated inefficiency
The area where just about the right attitude toward government prevails is military affairs: Everybody who has spent time around the military knows that bureaucratic inefficiency
is a constantly looming danger, but nobody (except truly purist libertarians and disarmers) argues that there's any choice but to use a government agency to defend the country.
Keywords Cost inefficiency
* Stochastic cost frontier * Government ownership * Universities
The relationship between production technical inefficiency
(loss of output due to technical inefficiency
) and profit technical inefficiency
(profit loss due to technical inefficiency
) is derived for a flexible production function.
The point is not that government is efficient--it is not--but that the cure for its inefficiency
does not lie in hyped-up nostrums from the business world.