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Centralised reallocation of emission permits using DEA

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  • Lozano, S.
  • Villa, G.
  • Brännlund, R.
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    Abstract

    In this paper a data envelopment analysis (DEA) approach to the problem of emission permits reallocation is presented. It can be used with conventional command and control as well as with an allowance market. It uses a centralized point of view, which represents the common good. In the model it is assumed that firms produce two types of outputs: desirable outputs (i.e. good outputs with positive value for consumers) and undesirable outputs (i.e. bad outputs with negative value for consumers, such as emissions of pollutants). The proposed approach has three phases, which correspond to three objectives that are pursued lexicographically. The three objectives are maximizing aggregated desirable production, minimizing undesirable total emissions and minimizing the consumption of input resources. The relative priority of these objectives is defined by the regulator. The whole approach is units-invariant and does not require information on input and output prices. The approach is applied on a dataset from the Swedish pulp and paper industry.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 193 (2009)
    Issue (Month): 3 (March)
    Pages: 752-760

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    Handle: RePEc:eee:ejores:v:193:y:2009:i:3:p:752-760

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    Web page: http://www.elsevier.com/locate/eor

    Related research

    Keywords: Environment Emission permits Cap-and-trade Allowance allocation Data envelopment analysis;

    References

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    Citations

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    Cited by:
    1. Lozano, S., 2013. "DEA production games," European Journal of Operational Research, Elsevier, vol. 231(2), pages 405-413.
    2. Zhou, P. & Ang, B.W. & Han, J.Y., 2010. "Total factor carbon emission performance: A Malmquist index analysis," Energy Economics, Elsevier, vol. 32(1), pages 194-201, January.
    3. Chiu, Ching-Ren & Liou, Je-Liang & Wu, Pei-Ing & Fang, Chen-Ling, 2012. "Decomposition of the environmental inefficiency of the meta-frontier with undesirable output," Energy Economics, Elsevier, vol. 34(5), pages 1392-1399.
    4. Mondelaers, Koen & Kuosmanen, Timo & Van Passel, Steven & Buysse, Jeroen & Lauwers, Ludwig H. & Van Huylenbroeck, Guido, 2011. "Sustainable Efficiency Of Firms When New Sustainability Targets Are Introduced," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114633, European Association of Agricultural Economists.
    5. Sarkis, Joseph & Cordeiro, James J., 2012. "Ecological modernization in the electrical utility industry: An application of a bads–goods DEA model of ecological and technical efficiency," European Journal of Operational Research, Elsevier, vol. 219(2), pages 386-395.

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