IDEAS home Printed from https://ideas.repec.org/a/spr/cejnor/v18y2010i2p153-170.html
   My bibliography  Save this article

Effect of regulation on efficiency: evidence from Indian cement industry

Author

Listed:
  • Simanti Bandyopadhyay

Abstract

The main objective of the paper is to analyze the impact of environmental regulation on technical efficiencies of Indian cement producing firms. It derives the technical efficiency (TE) scores of firms in the presence and absence of regulation and brings out the differences in their magnitudes in two scenarios: one in which the firms take initiatives to comply with the set standards by investing additional resources for pollution abatement and the other in which the firms do not take the necessary initiatives. The paper uses establishment level data from Annual Survey of Industries on cement for two years, the most recent data published for 2003–2004 and a previous year for 1999–2000 when the environmental regulations in India were in the initial phases of implementation. A non-parametric deterministic method of data envelopment analysis (DEA) is used to derive the TE scores of firms. The traditional DEA framework is modified by introducing weak disposability of bad outputs to characterize ‘effective environmental regulation’, which ensures that reducing pollution is not costless. For both years it has been found that the TE scores of firms under ‘effective regulation’ scenario are either higher than or equal to those derived under ‘ineffective regulation’ scenario resulting in a higher average TE at the industry level in the ‘effective regulation’ scenario. Copyright Springer-Verlag 2010

Suggested Citation

  • Simanti Bandyopadhyay, 2010. "Effect of regulation on efficiency: evidence from Indian cement industry," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 18(2), pages 153-170, June.
    • Handle: RePEc:spr:cejnor:v:18:y:2010:i:2:p:153-170
    DOI: 10.1007/s10100-009-0118-y
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10100-009-0118-y
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10100-009-0118-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Good, David H. & Nadiri, M. Ishaq & Sickles, Robin C., 1989. "The Structure Of Production, Technical Change And Efficiency In A Multiproduct Industry: An Application To U.S. Airlines," Working Papers 89-14, C.V. Starr Center for Applied Economics, New York University.
    2. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September.
    3. Ray,Subhash C., 2012. "Data Envelopment Analysis," Cambridge Books, Cambridge University Press, number 9781107405264, January.
    4. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
    5. 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.
    6. M. Murty & Surender Kumar & Kishore Dhavala, 2007. "Measuring environmental efficiency of industry: a case study of thermal power generation in India," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 31-50, September.
    7. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    8. Page, John M, Jr, 1980. "Technical Efficiency and Economic Performance: Some Evidence from Ghana," Oxford Economic Papers, Oxford University Press, vol. 32(2), pages 319-339, July.
    9. Hailin Liao & Mark Holmes & Tom Weyman-Jones & David Llewellyn, 2007. "Productivity growth of East Asia economies' manufacturing: A decomposition analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 43(4), pages 649-674.
    10. Philippe Barla & Sergio Perelman, 1989. "Technical Efficiency In Airlines Under Regulated And Deregulated Environments," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 60(1), pages 103-124, January.
    11. Wayne B Gray & Ronald J Shadbegian, 1994. "Pollution Abatement Costs, Regulation And Plant-Level Productivity," Working Papers 94-14, Center for Economic Studies, U.S. Census Bureau.
    12. Kay, J A & Thompson, D J, 1986. "Privatisation: A Policy in Search of a Rationale," Economic Journal, Royal Economic Society, vol. 96(381), pages 18-32, March.
    13. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    14. Barbera, Anthony J. & McConnell, Virginia D., 1990. "The impact of environmental regulations on industry productivity: Direct and indirect effects," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 50-65, January.
    15. Keith Hartley & David Parker & Stephen Martin, 1991. "Organisational Status, Ownership and Productivity," Fiscal Studies, Institute for Fiscal Studies, vol. 12(2), pages 46-60, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Margaréta Halická & Mária Trnovská, 2018. "Negative features of hyperbolic and directional distance models for technologies with undesirable outputs," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 26(4), pages 887-907, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. S Bandyopadhyay, 2011. "In search of contextual variables in a stochastic DEA framework: effect of regulation on efficiency of Indian cement industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(9), pages 1621-1637, September.
    2. Maria Francesca Cracolici & Peter Nijkamp & Miranda Cuffaro, 2007. "Efficiency and Productivity of Italian Tourist Destinations: A Quantitative Estimation Based on Data Envelopment Analysis and the Malmquist Method," Springer Books, in: Álvaro Matias & Peter Nijkamp & Paulo Neto (ed.), Advances in Modern Tourism Research, chapter 0, pages 325-343, Springer.
    3. Brännlund, Runar, 2008. "Productivity and environmental regulations - A long run analysis of the Swedish industry," Umeå Economic Studies 728, Umeå University, Department of Economics.
    4. Botti, Laurent & Briec, Walter & Cliquet, Gérard, 2009. "Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance," Omega, Elsevier, vol. 37(3), pages 566-578, June.
    5. Bozec, Richard & Dia, Mohamed, 2007. "Board structure and firm technical efficiency: Evidence from Canadian state-owned enterprises," European Journal of Operational Research, Elsevier, vol. 177(3), pages 1734-1750, March.
    6. Hamamoto, Mitsutsugu, 2006. "Environmental regulation and the productivity of Japanese manufacturing industries," Resource and Energy Economics, Elsevier, vol. 28(4), pages 299-312, November.
    7. Jesus Pastor & Juan Aparicio & Juan Monge & Diego Pastor, 2013. "Modeling CRS bounded additive DEA models and characterizing their Pareto-efficient points," Journal of Productivity Analysis, Springer, vol. 40(3), pages 285-292, December.
    8. R. Amy Puenpatom & Robert Rosenman, 2006. "Efficiency of Thai provincial public hospitals after the introduction of National Health Insurance Program," Working Papers 2006-2, School of Economic Sciences, Washington State University.
    9. Van Meensel, Jef & Lauwers, Ludwig & Van Huylenbroeck, Guido & Van Passel, Steven, 2010. "Comparing frontier methods for economic-environmental trade-off analysis," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1027-1040, December.
    10. Franz R. Hahn, 2007. "Determinants of Bank Efficiency in Europe. Assessing Bank Performance Across Markets," WIFO Studies, WIFO, number 31499, April.
    11. Hu, Jin-Li & Wang, Shih-Chuan & Yeh, Fang-Yu, 2006. "Total-factor water efficiency of regions in China," Resources Policy, Elsevier, vol. 31(4), pages 217-230, December.
    12. Alexander Cotte Poveda, 2012. "Estimating Effectiveness of the Control of Violence and Socioeconomic Development in Colombia: An Application of Dynamic Data Envelopment Analysis and Data Panel Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 105(3), pages 343-366, February.
    13. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2000. "Technological Change and the Environment," Working Paper Series rwp00-002, Harvard University, John F. Kennedy School of Government.
    14. Philippe K. Widmer & Peter Zweifel, 2008. "Public Good Provision in a Federalist Country: Tiebout Competition, Fiscal Equalization, and Incentives for Efficiency in Switzerland," SOI - Working Papers 0804, Socioeconomic Institute - University of Zurich, revised Dec 2010.
    15. Ülengin, Füsun & Kabak, Özgür & Önsel, Sule & Aktas, Emel & Parker, Barnett R., 2011. "The competitiveness of nations and implications for human development," Socio-Economic Planning Sciences, Elsevier, vol. 45(1), pages 16-27, March.
    16. John C. Topuz & Ali F. Darrat & Roger M. Shelor, 2005. "Technical, Allocative and Scale Efficiencies of REITs: An Empirical Inquiry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(9‐10), pages 1961-1994, November.
    17. Sahba Fatima, 2016. "Performance Evaluation of Thermal Power Generation: Non-Parametric Frontier Approach," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 4(1), pages 81-92, March.
    18. Isabel Narbón-Perpiñá & Maria Teresa Balaguer-Coll & Marko Petrović & Emili Tortosa-Ausina, 2020. "Which estimator to measure local governments’ cost efficiency? The case of Spanish municipalities," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 11(1), pages 51-82, March.
    19. Fabio A. Madau & Roberto Furesi & Pietro Pulina, 2017. "Technical efficiency and total factor productivity changes in European dairy farm sectors," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-14, December.
    20. César Salazar & Roberto Cárdenas-Retamal & Marcela Jaime, 2023. "Environmental efficiency in the salmon industry—an exploratory analysis around the 2007 ISA virus outbreak and subsequent regulations in Chile," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 8107-8135, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:cejnor:v:18:y:2010:i:2:p:153-170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.