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Efficiency and environmental regulation: a "complex situation"

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  • Andrés J. Picazo-Tadeo

    () (Departamento de Economía Aplicada II, Universitat de Valencia)

  • Diego Prior

    () (Departament d'Economia de l'Empresa, Universitat Autonoma de Barcelona)

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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Bibliographic Info

Paper provided by Department of Business Economics, Universitat Autonoma de Barcelona in its series Working Paper 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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Cited by:
  1. Førsund, Finn R., 2008. "Good Modelling of Bad Outputs: Pollution and Multiple-Output Production," Memorandum 30/2008, Oslo University, Department of Economics.
  2. Davutyan, Nurhan & Bilsel, Murat & Tarcan, Menderes, 2012. "Risk-Adjusted Mortality, varieties of congestion and patient satisfaction in Turkish provincial general hospitals," MPRA Paper 37437, University Library of Munich, Germany.

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