Allocative inefficiency and its cost: The case of Spanish public hospitals

Rodríguez-Álvarez, Ana, Fernández-Blancoa, Víctor and Lovell, C. A. Knox (2004) Allocative inefficiency and its cost: The case of Spanish public hospitals. International Journal of Production Economics, 92 2: 99-111. doi:10.1016/j.ijpe.2003.08.012

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Author Rodríguez-Álvarez, Ana
Fernández-Blancoa, Víctor
Lovell, C. A. Knox
Title Allocative inefficiency and its cost: The case of Spanish public hospitals
Journal name International Journal of Production Economics   Check publisher's open access policy
ISSN 0925-5273
Publication date 2004-11
Sub-type Article (original research)
DOI 10.1016/j.ijpe.2003.08.012
Volume 92
Issue 2
Start page 99
End page 111
Total pages 13
Place of publication Amsterdam, The Netherlands; New York, U.S.A.
Publisher Elsevier
Language eng
Subject 09 Engineering
0913 Mechanical Engineering
Abstract In this paper, we present a new empirical model based on an input distance function, from which estimates of allocative inefficiency and its cost can be obtained. The model avoids the “Greene problem,” which refers to the difficulty in practice of using a cost system to separate economic inefficiency into its technical and allocative components. We also develop a procedure to calculate the cost of allocative inefficiency. Using a panel of Spanish public hospitals to apply our methodology, we find evidence of systematic allocative inefficiency in the employment of variable inputs. Since inputs are generally poor substitutes, the cost of this allocative inefficiency is high.
Keyword Allocative inefficiency cost
Spanish public hospitals
Duality theory
Greene problem
Parametric input distance function
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
School of Economics Publications
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Citation counts: TR Web of Science Citation Count  Cited 13 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 17 times in Scopus Article | Citations
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Created: Tue, 15 Dec 2009, 15:29:12 EST by Ms May Balasaize on behalf of Faculty of Business, Economics & Law