6533b85cfe1ef96bd12bc0f4
RESEARCH PRODUCT
A bargaining model of Farrell inefficiency
Jonathan HaskelAmparo Sanchissubject
Productive efficiencyEconomics and EconometricsRelation (database)Strategy and ManagementEconomics Econometrics and Finance (miscellaneous)Measure (mathematics)MicroeconomicsCompetition (economics)jel:J24Frontierjel:L10Competition; effort; technical efficiency; X-inefficiencyIndustrial relationsEconomicsAllocative efficiencyInefficiencyMonopolydescription
Abstract An enormous number of empirical papers have estimated technical efficiency, the distance of firms inside a frontier, following the model of Farrell (Farrell, 1957. The measurement of productive efficiency. Journal of the Royal Statistical Society Series A 120 (3), 253–290). We propose a theory that explains the distance these empirical papers seek to measure. The theory is based on the idea that workers can bargain low `effort' (high crew sizes etc.) if they and the firm have some monopoly power. We provide simple theoretical expressions for the empirical measures of technical and allocative efficiency and compare them to those in the statistical literature. We also consider the relation between competition and efficiency.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 1998-06-01 |