Abstract
Summary This study attemps to (1) bring together the various definitions of efficiency found in the economic literature, (2) integrate the notion of inefficiency into standard microeconomic theory, (3) measure efficiency empirically at the plant level in 26 Swedish manufacturing industries, and (4) analyze the results in terms of macroeconomic variables. It is found that tariffs adversely affect efficiency and that the four-firm concentration ratio is positively and stongly associated with efficiency. The interpretation of the latter result is that at least in a small, open economy like Sweden, the concentration ratio reflects economies of scale and specialization rather than the market power of the largest firms.
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