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Weak and strong disposability vs. natural and managerial disposability in DEA environmental assessment: Comparison between Japanese electric power industry and manufacturing industries

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  • Sueyoshi, Toshiyuki
  • Goto, Mika
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    Abstract

    The economic concept of weak and strong disposability has long dominated studies on DEA (Data Envelopment Analysis) environmental assessment. This study reviews the two disposability concepts from their conceptual and methodological implications. In particular, this study is interested in the concept of weak disposability because the concept is believed to have an analytical capability to measure an occurrence of “congestion”. The two economic concepts on disposability, accepted by production economists, are replaced by natural and managerial disposability in this study. The natural disposability implies an environmental strategy by which a firm attempts to decrease an input vector to reduce a vector of undesirable outputs. Given the decreased input vector, a firm attempts to increase a vector of desirable outputs as much as possible. This type of strategy indicates negative adaptation. In contrast, the managerial disposability indicates an opposite strategy by increasing the input vector. This disposability expresses an environmental strategy by which a firm considers a regulation change as a new business opportunity. A firm attempts to improve its unified performance by utilizing new clean air technology and/or new management. The strategy indicates positive adaptation. Considering the two groups of disposability, this study compares between weak/strong disposability and natural/managerial disposability in terms of their conceptual and methodological differences, focusing upon the concept of congestion and technology innovation. Furthermore, using the concept of natural and managerial disposability, this study compares Japanese electric power firms with manufacturing firms. This study finds that the manufacturing firms outperform the electric power firms under natural disposability. An opposite result is found under managerial disposability. This empirical study also finds that the two groups of Japanese firms have attained desirable (good) congestion due to technology innovation. Based upon such empirical results, this study identifies two policy implications. One of the two implications is that the two groups of Japanese industries have attained a high level of technology innovation by a result of environmental regulation. The other is that the electric power industry operates more efficiently to reduce the CO2 emission than the manufacturing industries.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 34 (2012)
    Issue (Month): 3 ()
    Pages: 686-699

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    Handle: RePEc:eee:eneeco:v:34:y:2012:i:3:p:686-699

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

    Related research

    Keywords: Environmental assessment; DEA; Disposability; Congestion; Technology innovation;

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    References

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    Citations

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    Cited by:
    1. Sueyoshi, Toshiyuki & Goto, Mika, 2013. "DEA environmental assessment in a time horizon: Malmquist index on fuel mix, electricity and CO2 of industrial nations," Energy Economics, Elsevier, vol. 40(C), pages 370-382.
    2. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Returns to scale and damages to scale on U.S. fossil fuel power plants: Radial and non-radial approaches for DEA environmental assessment," Energy Economics, Elsevier, vol. 34(6), pages 2240-2259.
    3. Chen, Chien-Ming, 2013. "A critique of non-parametric efficiency analysis in energy economics studies," Energy Economics, Elsevier, vol. 38(C), pages 146-152.
    4. Sueyoshi, Toshiyuki & Goto, Mika & Sugiyama, Manabu, 2013. "DEA window analysis for environmental assessment in a dynamic time shift: Performance assessment of U.S. coal-fired power plants," Energy Economics, Elsevier, vol. 40(C), pages 845-857.
    5. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "DEA environmental assessment of coal fired power plants: Methodological comparison between radial and non-radial models," Energy Economics, Elsevier, vol. 34(6), pages 1854-1863.
    6. Sueyoshi, Toshiyuki & Goto, Mika, 2014. "DEA radial measurement for environmental assessment: A comparative study between Japanese chemical and pharmaceutical firms," Applied Energy, Elsevier, vol. 115(C), pages 502-513.
    7. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Returns to Scale, Damages to Scale, Marginal Rate of Transformation and Rate of Substitution in DEA Environmental Assessment," Energy Economics, Elsevier, vol. 34(4), pages 905-917.
    8. Halkos, George & Tzeremes, Nickolaos, 2013. "An additive two-stage DEA approach creating sustainability efficiency indexes," MPRA Paper 44231, University Library of Munich, Germany.
    9. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Returns to Scale and Damages to Scale with Strong Complementary Slackness Conditions in DEA Assessment: Japanese Corporate Effort on Environment Protection," Energy Economics, Elsevier, vol. 34(5), pages 1422-1434.
    10. Sueyoshi, Toshiyuki & Goto, Mika, 2013. "A comparative study among fossil fuel power plants in PJM and California ISO by DEA environmental assessment," Energy Economics, Elsevier, vol. 40(C), pages 130-145.

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