Some reflections on technical and allocative inefficiency modeling

Subal C Kumbhakar

Tourism Economics, 2025, vol. 31, issue 1, 40-52

Abstract: This paper offers a concise overview of the existing literature on efficiency and productivity, focusing on stochastic frontier models. The emphasis is placed on technical inefficiency (TI), defined as the failure to produce the maximum output given inputs, and allocative inefficiency (AI), arising from non-optimal input utilization. The primary objective of this brief survey is to assist readers in grasping the fundamental concepts of modelling TI and AI within single and/or multiple output production technologies. Additionally, attention is given to the challenges associated with computing the cost of AI (CAI) in primal-based models, as well as modelling CAI within dual cost and profit functions.

Keywords: cost and profit functions; primal and dual systems; stochastic frontier; technical and allocative inefficiency; C10; C30; D21; D22 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/13548166241248015 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:31:y:2025:i:1:p:40-52

DOI: 10.1177/13548166241248015

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().