The human factor in efficiency studies

In a market economy efficiency is regulated by market, as economic activity is driven by interests. To gain interest, every resource investor must group his production factors in light of supply and demand and prices, and raise his efficiency. Therefore, the mechanism behind efficiency in the market economy is none other than the interest mechanism, or market mechanism, and the investor's goal is to maximize his interest. Thus motivation for interest and the lure of goals are unified insofar as efficiency is concerned.

Where there is government regulation besides market regulation, there will be the impact of government regulation on efficiency. The lure of goals is by and large a manifestation of such impact. Government goals are multiple rather than single. To meet its goals, the government needs to influence resource investors by way of regulatory means, and compel them to choose investment fields and forms of investment in line with government goals. Efficiency is affected as a result.

Because market regulation works hand in hand with government regulation, efficiency, whether high or low, is under their combined influence. Our study of this issue, however, does not stop just here. We need to probe deeper into it, because those engaged in market activity are individual traders, each being a resource investor. Market participants are subject to government regulation.