This note is a part of my Zettelkasten. What is below might not be complete or accurate. It
is also likely to change often.
Allocation Efficiency is the measure of how efficient the distribution of capital is. At peak allocation efficiency, all goods, services and capital have been allocated to the entity which can derive maximum values out of it. No alternate distribution can generate better outcomes.
Under high allocation efficiency, no capital would lay unused or under-used and no arable land would lie fallow.
In practice, Transaction costs of the market cause Allocative Efficiency to be suboptimal.