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Returns to Scale, Damages to Scale, Marginal Rate of Transformation and Rate of Substitution in DEA Environmental Assessment

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  • Sueyoshi, Toshiyuki
  • Goto, Mika
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    Abstract

    This study discusses a new use of DEA (Data Envelopment Analysis) environmental assessment to measure MRT (Marginal Rate of Transformation) and RS (Rate of Substitution) between desirable and undesirable outputs. To discuss MRT and RS, this study first examines a concept of disposability from the perspective of corporate strategies to adapt a regulation change on undesirable outputs. The concept of disposability is separated into natural and managerial disposability. Then, this study explores the computational framework of RTS (Returns to Scale) and DTS (Damages to Scale). The type of RTS is measured within the natural disposability, while the type of DTS is measured within the managerial disposability. Considering the two types of disposability, this study discusses MRT and RS between desirable and undesirable outputs. As an illustrative example, this study applies the proposed approach to evaluate the performance of US coal-fired power plants. This study finds that the regulation policy on NOx and SO2 has been effective on their emission controls under US Clean Air Act (CAA). The regulation on CO2, or a major source of the global warming and climate change, is still insufficient in the United States. Therefore, this study recommends that US federal and local governments should regulate the amount of CO2 emission under the CAA.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0140988312000801
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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 34 (2012)
    Issue (Month): 4 ()
    Pages: 905-917

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    Handle: RePEc:eee:eneeco:v:34:y:2012:i:4:p:905-917

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

    Related research

    Keywords: Environmental assessment; Returns to Scale; Damages to Scale; Rate of Substitution;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2009. "An occurrence of multiple projections in DEA-based measurement of technical efficiency: Theoretical comparison among DEA models from desirable properties," European Journal of Operational Research, Elsevier, vol. 196(2), pages 764-794, July.
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    7. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Environmental assessment by DEA radial measurement: U.S. coal-fired power plants in ISO (Independent System Operator) and RTO (Regional Transmission Organization)," Energy Economics, Elsevier, vol. 34(3), pages 663-676.
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    15. Sueyoshi, Toshiyuki & Goto, Mika, 2011. "Measurement of Returns to Scale and Damages to Scale for DEA-based operational and environmental assessment: How to manage desirable (good) and undesirable (bad) outputs?," European Journal of Operational Research, Elsevier, vol. 211(1), pages 76-89, May.
    16. Yang, Hongliang & Pollitt, Michael, 2010. "The necessity of distinguishing weak and strong disposability among undesirable outputs in DEA: Environmental performance of Chinese coal-fired power plants," Energy Policy, Elsevier, vol. 38(8), pages 4440-4444, August.
    17. W. Cooper & Dr. Park & Professor Ciurana, 2000. "Marginal Rates and Elasticities of Substitution with Additive Models in DEA," Journal of Productivity Analysis, Springer, vol. 13(2), pages 105-123, March.
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    19. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Returns to scale and damages to scale under natural and managerial disposability: Strategy, efficiency and competitiveness of petroleum firms," Energy Economics, Elsevier, vol. 34(3), pages 645-662.
    20. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Weak and strong disposability vs. natural and managerial disposability in DEA environmental assessment: Comparison between Japanese electric power industry and manufacturing industries," Energy Economics, Elsevier, vol. 34(3), pages 686-699.
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    22. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Data envelopment analysis for environmental assessment: Comparison between public and private ownership in petroleum industry," European Journal of Operational Research, Elsevier, vol. 216(3), pages 668-678.
    23. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "DEA radial and non-radial models for unified efficiency under natural and managerial disposability: Theoretical extension by strong complementary slackness conditions," Energy Economics, Elsevier, vol. 34(3), pages 700-713.
    24. Emrouznejad, Ali & Parker, Barnett R. & Tavares, Gabriel, 2008. "Evaluation of research in efficiency and productivity: A survey and analysis of the first 30 years of scholarly literature in DEA," Socio-Economic Planning Sciences, Elsevier, vol. 42(3), pages 151-157, September.
    25. Asmild, Mette & Paradi, Joseph C. & Reese, David N., 2006. "Theoretical perspectives of trade-off analysis using DEA," Omega, Elsevier, vol. 34(4), pages 337-343, August.
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    29. Sueyoshi, Toshiyuki & Goto, Mika, 2011. "Methodological comparison between two unified (operational and environmental) efficiency measurements for environmental assessment," European Journal of Operational Research, Elsevier, vol. 210(3), pages 684-693, May.
    30. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2007. "The measurement of returns to scale under a simultaneous occurrence of multiple solutions in a reference set and a supporting hyperplane," European Journal of Operational Research, Elsevier, vol. 181(2), pages 549-570, September.
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    Citations

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    Cited by:
    1. 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.
    2. Førsund, Finn & Granderson, Gerald, 2013. "The impacts of the Clean Air Act on production cost, and the substitution between inputs in the electric utility industry," Energy Economics, Elsevier, vol. 40(C), pages 785-794.
    3. 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.
    4. 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.
    5. Sueyoshi, Toshiyuki & Goto, Mika, 2014. "Investment strategy for sustainable society by development of regional economies and prevention of industrial pollutions in Japanese manufacturing sectors," Energy Economics, Elsevier, vol. 42(C), pages 299-312.

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