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...

In the literature on the topic, excess capacity in the hospital sector is usually calculated using a short-run cost function, which implies cost minimisation with respect to variable inputs. However, the analysis of NHS hospitals reveals a bureaucratic structure characterised by expense...