Allocative Efficiency


This describes the important economic idea of allocative efficiency. It explains the distinction between allocative efficiency and allocative inefficiency and provides economic case study evidence, as well as different types of measures of allocative efficiency.

Technique Overview

Allocative Efficiency

Allocative Efficiency Definition

Efficiency is the property of a resource allocation of maximising the total surplus received by all members of society. The total surplus in a market is the total value received by the consumers minus the cost to the sellers. Allocative Efficiency is where the resources allocation maximises this surplus (Mankiw, 2009).

Allocative Efficiency Description *

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Business Evidence

Strengths, weaknesses and examples of Allocative Efficiency *

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Business Application

Implementation, success factors and measures of Allocative Efficiency *

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Professional Tools

Allocative Efficiency videos and downloads *

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Further Reading

Allocative Efficiency web and print resources *

Allocative Efficiency references (4 of up to 20) *

  • Anderton, A. (2006) Economics (3rd ed.), Longman, London.
  • Arnold, J., Nicoletti, G., Scarpetta, S. (2008). Regulation, Allocative Efficiency and Productivity in OECD Countries: Industry and Firm-Level Evidence. Economics Department Working Papers, No. 616, OECD Publishing.
  • Beardshaw, J. (2001) Economics: a student's guide. Pearson Education.
  • Elliot, H. (2009) Most Fuel-Efficient Cars For The Buck. Forbes, Mar 30. Available at: [Accessed on 16 october 2011].

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