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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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  • Yang, H.
  • Pollitt, M.

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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Bibliographic 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
Date of revision:
Handle: RePEc:cam:camdae:0741

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

Related research

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

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  1. Patrick L. Brockett & Boaz Golany, 1996. "Using Rank Statistics for Determining Programmatic Efficiency Differences in Data Envelopment Analysis," Management Science, INFORMS, INFORMS, vol. 42(3), pages 466-472, March.
  2. 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.
  3. Korhonen, Pekka J. & Luptacik, Mikulas, 2004. "Eco-efficiency analysis of power plants: An extension of data envelopment analysis," European Journal of Operational Research, Elsevier, Elsevier, vol. 154(2), pages 437-446, April.
  4. Fare, Rolf & Grosskopf, Shawna & Tyteca, Daniel, 1996. "An activity analysis model of the environmental performance of firms--application to fossil-fuel-fired electric utilities," Ecological Economics, Elsevier, Elsevier, vol. 18(2), pages 161-175, August.
  5. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 93(372), pages 883-91, December.
  6. Pun-Lee Lam & Alice Shiu, 2004. "Efficiency and Productivity of China's Thermal Power Generation," Review of Industrial Organization, Springer, Springer, vol. 24(1), pages 73-93, 02.
  7. 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.
  8. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, Elsevier, vol. 2(6), pages 429-444, November.
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Cited by:
  1. Kaneko, Shinji & Fujii, Hidemichi & Sawazu, Naoya & Fujikura, Ryo, 2010. "Financial allocation strategy for the regional pollution abatement cost of reducing sulfur dioxide emissions in the thermal power sector in China," Energy Policy, Elsevier, Elsevier, vol. 38(5), pages 2131-2141, May.
  2. Roberto Gómez-Calvet & David Conesa & Ana Rosa Gómez-Calvet & Emili Tortosa-Ausina, 2013. "Energy efficiency in the European Union: What can be learned from the joint application of directional distance functions and slacks-based measures?," Working Papers, Economics Department, Universitat Jaume I, Castellón (Spain) 2013/17, Economics Department, Universitat Jaume I, Castellón (Spain).

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