Wibe, Sören
- Department of Forest Economics, Swedish University of Agricultural Sciences
Abstract
Most firms work with a technology less efficient than the best available. In a dynamic context, this is perfectly rational, since it is uneconomical to scrap old capital equipment as soon as a new and better model appears in the market. In a dynamic context, we would expect a difference between the observable technology of a firm and the technological frontier, a sort of "rational inefficiency". In this paper we construct an equilibrium growth model that allows us to calculate the size of this particular inefficiency, and we discuss how it relates to the efficiency measures in the widely used Farell model. (c) 2008 Elsevier B.V. All rights reserved.
Keywords
efficiency; dynamic model; engineering production function
Published in
International Journal of Production Economics
2008, volume: 115, number: 1, pages: 86-91
SLU Authors
UKÄ Subject classification
Economics and Business
Social Sciences
Publication identifier
- DOI: https://doi.org/10.1016/j.ijpe.2008.05.001
Permanent link to this page (URI)
https://res.slu.se/id/publ/20526