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Productivity and Undesirable Outputs: A Directional Distance Function Approach

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  • Yangho Chung

    (Southern Illinois Univ. at Carbondale)

  • Rolf Fare

    (Southern Illinois Univ. at Carbondale)

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    Abstract

    Undesirable outputs are often produced together with desirable outputs. This joint production of good and bad outputs brings about a difficulty for productivity measurement. Here we introduce a directional distance function and use it as a component in a new productivity index. This index, as an empirical example shows, seems to solve the problem caused by the joint production of good and bad outputs.

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    Bibliographic Info

    Paper provided by EconWPA in its series Microeconomics with number 9511002.

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    Length: 18 pages
    Date of creation: 07 Nov 1995
    Date of revision: 08 Nov 1995
    Handle: RePEc:wpa:wuwpmi:9511002

    Note: Type of Document - WordPerfect 5.1; prepared on IBM-compatible PC; to print on HP LaserJet 3 (1Mb memory); pages: 18; figures: included within WP5.1 document. Single binary WP5.1 document 'put' by anonymous FTP. Visit our working paper Web page! Point your Web browser to
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    Related research

    Keywords: productivity & efficiency measurement; joint products; distance functions;

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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. 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.
    2. Briec, W., 1995. "A Graph Type Extension of Farrell Technical Efficiency Measure," G.R.E.Q.A.M. 95a28, Universite Aix-Marseille III.
    3. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    4. Fare, R. & Grosskopf, S. & Pasurka, C., 1986. "Effects on relative efficiency in electric power generation due to environmental controls," Resources and Energy, Elsevier, vol. 8(2), pages 167-184, June.
    5. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December.
    6. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
    7. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
    8. Runar Brannlund & Yangho Chung & Rolf Fare & Shawna Grosskopf, 1995. "Emissions Trading and Profitability: The Swedish Pulp and Paper Industry," Others 9506001, EconWPA.
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    Cited by:
    1. David I. Stern, 2004. "Diffusion of Emissions Abating Technology," Rensselaer Working Papers in Economics 0420, Rensselaer Polytechnic Institute, Department of Economics.
    2. Subhash C. Ray & Kankana Mukherjee, 2007. "Efficiency in Managing the Environment and the Opportunity Cost of Pollution Abatement," Working papers 2007-09, University of Connecticut, Department of Economics.

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