Traditional microeconomic theory is concerned with the allocation of scarce resources through the mechanism of prices and markets. The efficient allocation of resources by prices and markets is called allocative efficiency. In emphasizing the allocative function of prices and markets,...

1. Introduction -- 1.1. Introduction -- 1.2. X- and allocative efficiency, and the welfare losses from monopoly power -- 1.3. X-efficiency, and the neoclassical production and cost functions -- 1.4. The development of XE theory -- 1.5. XE theory and generalized neoclassical theory. -- 1.6. XE...