X-efficiency. An intervening variable
Abstract
X-Efficiency theory states that a greater amount of product market competition will pressure firm members to produce with more effort so that the firm is producing closer to their frontiers. Firms will as a result produce closer to their frontiers. At least 200 empirical studies from all parts of the world and using data from many industries supports the theory. The 1966 article asked about the implications if and when decision-makers are not completely rational. He abandoned a basic assumption of human behavior, the assumption of complete rationality, and this makes it behavioral. The implication is that there is a form of (in) efficiency which is not of the allocative variety but a form ...
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