Efficiency in the context of financial markets can be defined in many ways. The major strand of finance literature measures the market's ability to process information into prices. Another strand of literature refers to the economists' usual sense of the word, i.e. that markets ensure that...

This paper combines information efficiency with the economists’ usual sense of the word “efficiency”, i.e. the allocation of resources to their most profitable expected use and at the lowest cost in terms of resources employed. The paper addresses dynamic efficiency, the ability of a...