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Distinguishing Weak and Strong Disposability among Undesirable Outputs in DEA: The Example of the Environmental Efficiency of Chinese Coal-Fired Power Plants

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Author Info
Yang, H.
Pollitt, M.

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Abstract

Different from traditional efficiency research and previous studies considering undesirable outputs, this paper proposes models which distinguish weak and strong disposability features among various undesirable outputs based on the technical nature of the undesirable outputs. The paper illustrates the approach using a research sample covering 582 base-load Chinese coal-fired power plants in 2002. Our final results show that (1) imposing the technically correct disposability features on undesirable outputs makes a significant difference to the final efficiency evaluation. This suggests the necessity of properly distinguishing disposability features among undesirable outputs in efficiency models; (2) compared to their US and European counterparts, Chinese power plants relatively waste more resources. This suggests a great urgency for the Chinese electricity industry to improve its efficiency in coal-fired electricity generation sector.

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Publisher Info
Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0741.

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Length: 24
Date of creation: 2007
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Handle: RePEc:cam:camdae:0741

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Web page: http://www.econ.cam.ac.uk/index.htm

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Related research
Keywords: Economics: input-output analysis; Environment; Government: energy policies; Industries: electric; Statistics: nonparametric.;

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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  1. 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)
  2. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November. [Downloadable!] (restricted)
  3. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December. [Downloadable!] (restricted)
  4. Korhonen, Pekka J. & Luptacik, Mikulas, 2004. "Eco-efficiency analysis of power plants: An extension of data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 154(2), pages 437-446, April. [Downloadable!] (restricted)
  5. Pun-Lee Lam & Alice Shiu, 2004. "Efficiency and Productivity of China's Thermal Power Generation," Review of Industrial Organization, Springer, vol. 24(1), pages 73-93, 02. [Downloadable!]
  6. Yaisawarng, Suthathip & Klein, J Douglass, 1994. "The Effects of Sulfur Dioxide Controls on Productivity Change in the U.S. Electric Power Industry," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 447-60, August. [Downloadable!] (restricted)
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