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Optimal Directions for Directional Distance Functions: An Exploration of Potential Reductions of Greenhouse Gases

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  • Benjamin Hampf
  • Jens J. Krüger

Abstract

This article explores the reduction potential of greenhouse gases for major pollution-emitting countries of the world using nonparametric productivity measurement methods and directional distance functions. In contrast to the existing literature, we apply optimization methods to endogenously determine optimal directions for the efficiency analysis. These directions represent the compromise of output enhancement and emissions reduction. The results show that for reasonable directions the adoption of best practices would lead to sizable emission reductions in a range of approximately 20% compared with current levels.

Suggested Citation

  • Benjamin Hampf & Jens J. Krüger, 2015. "Optimal Directions for Directional Distance Functions: An Exploration of Potential Reductions of Greenhouse Gases," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(3), pages 920-938.
  • Handle: RePEc:oup:ajagec:v:97:y:2015:i:3:p:920-938.
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    File URL: http://hdl.handle.net/10.1093/ajae/aau035
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