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Alternative measures of environmental technology structure in DEA: An application

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Author Info

  • Sahoo, Biresh K.
  • Luptacik, Mikulas
  • Mahlberg, Bernhard

Abstract

The nonparametric data envelopment analysis (DEA) literature on environmental efficiency (EE) considers handling undesirable outputs in two alternative ways: either in their original forms with the assumption that these are weakly disposable or in various translated forms with the assumption that these are strongly disposable. Choosing a particular approach implies adoption of a particular, distinct treatment of undesirable outputs, and hence yields a distinct set of EE estimates. To explore the effects of the interplay between choice of EE measure and specific treatment of undesirable outputs, this paper attempts to generate all possible output-oriented EE measures based on these two alternative approaches. Furthermore, guided by the argument that slacks are important in identifying properly the efficiency behavior of firms, it proposes two new alternative, slacks-based formulations of EE: one based on the range directional model, and the other on the generalized proportional distance function model. Using a confected data set of ten firms and a real-life data set of 22 OECD countries, our empirical analysis reveals that: first, EE scores are influenced not only by the choice of disposability assumption for undesirable outputs but also by the way these are treated in various translated forms; second, the choice of any particular treatment of undesirable outputs plays no role in influencing the rankings of firms; and third, our two new alternative EE formulations are, at the least, viable alternatives to existing EE measures in ranking firms according to their eco-efficiency behavior.

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Bibliographic Info

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

Volume (Year): 215 (2011)
Issue (Month): 3 (December)
Pages: 750-762

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Handle: RePEc:eee:ejores:v:215:y:2011:i:3:p:750-762

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

Related research

Keywords: Data envelopment analysis Environmental technology Environmental efficiency Undesirable outputs Weak disposability;

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Citations

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Cited by:
  1. Leleu, Hervé, 2013. "Shadow pricing of undesirable outputs in nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 231(2), pages 474-480.
  2. Cordero Ferrera, Jose Manuel & Alonso Morán, Edurne & Nuño Solís, Roberto & Orueta, Juan F. & Souto Arce, Regina, 2013. "Efficiency assessment of primary care providers: A conditional nonparametric approach," MPRA Paper 51926, University Library of Munich, Germany.
  3. Mikuláš Luptáèik & Bernhard Mahlberg, 2013. "Eco-Efficiency and Eco-Productivity change over time in a multisectoral economic system," Department of Economic Policy Working Paper Series 004, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
  4. Chang, Dong-Shang & Liu, Wenrong & Yeh, Li-Ting, 2013. "Incorporating the learning effect into data envelopment analysis to measure MSW recycling performance," European Journal of Operational Research, Elsevier, vol. 229(2), pages 496-504.
  5. Giannis Karagiannis & C. A. K. Lovell, 2013. "Productivity Measurement In Radial Dea Models With Multiple Constant Inputs," CEPA Working Papers Series WP082013, School of Economics, University of Queensland, Australia.
  6. Zhou, P. & Ang, B.W. & Wang, H., 2012. "Energy and CO2 emission performance in electricity generation: A non-radial directional distance function approach," European Journal of Operational Research, Elsevier, vol. 221(3), pages 625-635.
  7. Halkos, George E. & Tzeremes, Nickolaos G., 2013. "A conditional directional distance function approach for measuring regional environmental efficiency: Evidence from UK regions," European Journal of Operational Research, Elsevier, vol. 227(1), pages 182-189.
  8. H. K. Millington & J. E. Lovell & C. A. K. Lovell, 2013. "Using Fieldwork, GIS and DEA to Guide Management of Urban Stream Health," CEPA Working Papers Series WP072013, School of Economics, University of Queensland, Australia.

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