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Investments glossary

X-Efficiency


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Old is gold, but new is platinum.

— Amit

X-efficiency is the degree of efficiency maintained by firms under conditions of imperfect competition. An example of imperfect competition is a monopoly. According to the neoclassical theory of economics, under perfect competition, companies must maximize efficiency to succeed and make a profit; those who do not will fail and be forced to exit the market.

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