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Efficiency and environmental regulation: a "complex situation"

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Author Info
Andrés J. Picazo-Tadeo () (Departamento de Economía Aplicada II, Universitat de Valencia)
Diego Prior () (Departament d'Economia de l'Empresa, Universitat Autonoma de Barcelona)

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Abstract

Production of desirable outputs is often accompanied by undesirable by-products that have damaging effects on the environment, and whose disposal is frequently regulated by public authorities. In this paper, we compute directional technology distance functions under particular assumptions concerning disposability of bads in order to test for the existence of what we call ‘complex situations’, where the biggest producer is not the greatest polluter. Furthermore, we show that how in such situations, environmental regulation could achieve an effective reduction in the aggregate level of bad outputs without reducing the production of good outputs. Finally, we illustrate our methodology with an empirical application to a sample of Spanish tile ceramic producers.

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File URL: http://selene.uab.es/dep-economia-empresa/documents/05-2.pdf
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File Function: First version, 2005
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Publisher Info
Paper provided by Department of Business Economics, Universitat Autonoma de Barcelona in its series Working Papers with number 200502.

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Date of creation: Apr 2005
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Handle: RePEc:bbe:wpaper:200502

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Related research
Keywords: environmental regulation; efficiency; disposability of bads;

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Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Other Consumer Durables

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References listed on IDEAS
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.:
  1. Zofio, Jose L. & Prieto, Angel M., 2001. "Environmental efficiency and regulatory standards: the case of CO2 emissions from OECD industries," Resource and Energy Economics, Elsevier, vol. 23(1), pages 63-83, January. [Downloadable!] (restricted)
  2. Francesc Hernandez-Sancho & Andres Picazo-Tadeo & Ernest Reig-Martinez, 2000. "Efficiency and Environmental Regulation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(4), pages 365-378, April. [Downloadable!] (restricted)
  3. Fare, Rolf, et al, 1993. "Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 374-80, May. [Downloadable!] (restricted)
  4. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December. [Downloadable!] (restricted)
  5. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February. [Downloadable!] (restricted)
  6. Runar Brännlund & Rolf Färe & Shawna Grosskopf, 1995. "Environmental regulation and profitability: An application to Swedish pulp and paper mills," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 6(1), pages 23-36, July. [Downloadable!] (restricted)
  7. Coggins, Jay S. & Swinton, John R., 1996. "The Price of Pollution: A Dual Approach to Valuing SO2Allowances," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 58-72, January. [Downloadable!] (restricted)
  8. Picazo-Tadeo, Andres J. & Reig-Martinez, Ernest & Hernandez-Sancho, Francesc, 2005. "Directional distance functions and environmental regulation," Resource and Energy Economics, Elsevier, vol. 27(2), pages 131-142, June. [Downloadable!] (restricted)
  9. Francesc Hernández Sancho & Andrés Picazo & Ernest Reig Martínez, 1999. "- Shadow Prices And Distance Functions: An Analysis For Firms Of The Spanish Ceramic Pavements Industry," Working Papers. Serie EC 1999-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  10. V. Eldon Ball & Rolf Fare & Shawna Grosskopf & Richard Nehring, 2001. "Productivity of the U.S. Agricultural Sector: The Case of Undesirable Outputs," NBER Chapters, in: New Developments in Productivity Analysis, pages 541-586 National Bureau of Economic Research, Inc. [Downloadable!]
  11. Reinhard, Stijn & Lovell, C A Knox & Thijssen, Geert, 2002. " Analysis of Environmental Efficiency Variation," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(4), pages 1054-65, November. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Andrea Bikfalvi & Christian Serarols & David Urbano & Yancy Vaillant, 2007. "Technological Trampolines for new venture creation in Catalonia: the case of University of Girona," Working Papers 200701, Department of Business Economics, Universitat Autonoma de Barcelona. [Downloadable!]
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