The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Harvey Leibenstein
Reference work entry


One has to distinguish the X-efficiency concept from the theory intended to explain it. As a concept X-inefficiency is similar to technical inefficiency. Leibenstein originated the concept of X-inefficiency because of a belief that there is nothing technical about the most substantial sources of non-allocative inefficiencies in organizations. At the time of the original article (Leibenstein 1966), it seemed that no available concept, such as organizational inefficiency or motivational inefficiency, implied all the elements that could be involved in non-allocative inefficiencies. Hence, the comprehensive term, ‘X-inefficiency’, was used.


Free-rider problem Incomplete contracts Prisoner’s Dilemma Social norms X-efficiency 

JEL Classifications

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  1. Frantz, R. 1987. X-efficiency: Theory, evidence, and applications. New York: Kluwer-Nyhoff.CrossRefGoogle Scholar
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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Harvey Leibenstein
    • 1
  1. 1.