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Modeling emission-generating technologies: reconciliation of axiomatic and by-production approaches

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  • Sushama Murty

    (University of Exeter
    Jawaharlal Nehru University)

  • R. Robert Russell

    (University of California, Riverside)

Abstract

We study the link between two recent approaches to modeling emission-generating technologies: the by-production approach and the axiomatic approach. The by-production approach models these technologies as intersections of two independent sub-technologies reflecting (1) the relations between goods in intended-output production designed by human engineers and (2) the emission-generating mechanism of nature governed by material-balance considerations. The axiomatic approach proposes a set of axioms that a pollution-generating technology should satisfy. We show that the by-production technology satisfies these axioms and that, conversely, any technology satisfying the axioms can be decomposed into two sub-technologies satisfying the by-production properties. In either approach, the technology can be functionally represented by two radial distance functions with well-defined properties. These distance functions can also serve as measures of technological and environmental efficiency. We exploit the link between the by-production and axiomatic approaches to offer preliminary suggestions about suitable functional forms for the empirical estimation of the two distance functions.

Suggested Citation

  • Sushama Murty & R. Robert Russell, 2018. "Modeling emission-generating technologies: reconciliation of axiomatic and by-production approaches," Empirical Economics, Springer, vol. 54(1), pages 7-30, February.
    • Handle: RePEc:spr:empeco:v:54:y:2018:i:1:d:10.1007_s00181-016-1183-4
    DOI: 10.1007/s00181-016-1183-4
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    9. Sushama Murty, 2015. "On the properties of an emission-generating technology and its parametric representation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(2), pages 243-282, October.
    10. Kumbhakar, Subal C. & Tsionas, Efthymios G., 2016. "The good, the bad and the technology: Endogeneity in environmental production models," Journal of Econometrics, Elsevier, vol. 190(2), pages 315-327.
    11. Sushama Murty, 2015. "Marginal reforms to facilitate climate change mitigation: An assessment of costs and abilities to abate of different countries," Discussion Papers 1508, University of Exeter, Department of Economics.
    12. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249.
    13. Murty, Sushama & Robert Russell, R. & Levkoff, Steven B., 2012. "On modeling pollution-generating technologies," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 117-135.
    14. Moslener, Ulf & Requate, Till, 2007. "Optimal abatement in dynamic multi-pollutant problems when pollutants can be complements or substitutes," Journal of Economic Dynamics and Control, Elsevier, vol. 31(7), pages 2293-2316, July.
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    Cited by:

    1. Wang, Miao & Feng, Chao, 2021. "The consequences of industrial restructuring, regional balanced development, and market-oriented reform for China's carbon dioxide emissions: A multi-tier meta-frontier DEA-based decomposition analysi," Technological Forecasting and Social Change, Elsevier, vol. 164(C).
    2. Juan Aparicio & Jose Manuel Cordero & Carlos Díaz-Caro, 2020. "Efficiency and productivity change of regional tax offices in Spain: an empirical study using Malmquist–Luenberger and Luenberger indices," Empirical Economics, Springer, vol. 59(3), pages 1403-1434, September.
    3. Lai, Hung-pin & Kumbhakar, Subal C., 2021. "A panel frontier system model with good and bad outputs and endogenous treatment decision," Economics Letters, Elsevier, vol. 198(C).
    4. Aparicio, Juan & Kapelko, Magdalena & Zofío, José L., 2020. "The measurement of environmental economic inefficiency with pollution-generating technologies," Resource and Energy Economics, Elsevier, vol. 62(C).
    5. Sushama Murty & R. Robert Russell, "undated". "Bad Outputs," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 17-06, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    6. Tateishi, Henrique Ryosuke & Bragagnolo, Cassiano & de Faria, Rosane Nunes, 2020. "Economic and environmental efficiencies of greenhouse gases’ emissions under institutional influence," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    7. Roshdi, Israfil & Hasannasab, Maryam & Margaritis, Dimitris & Rouse, Paul, 2018. "Generalised weak disposability and efficiency measurement in environmental technologies," European Journal of Operational Research, Elsevier, vol. 266(3), pages 1000-1012.
    8. Magambo, Isaiah & Dikgang, Johane & Gelo, Dambala & Tregenna, Fiona, 2021. "Environmental and Technical Efficiency in Large Gold Mines in Developing Countries," MPRA Paper 108068, University Library of Munich, Germany.
    9. Sushama Murty & Resham Nagpal, "undated". "Choice of models for emission-generating technologies and designing technical efficiency improvements," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 19-01, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    10. Magambo, Isaiah Hubert & Dikgang, Johane & Gelo, Dambala & Tregenna, Fiona, 2021. "Dynamic Technical and Environmental Efficiency Performance of Large Gold Mines in Developing Countries," EconStor Preprints 235859, ZBW - Leibniz Information Centre for Economics.
    11. Finn R. Førsund, 2021. "Performance measurement and joint production of intended and unintended outputs," Journal of Productivity Analysis, Springer, vol. 55(3), pages 157-175, June.
    12. Sushama Murty & Resham Nagpal, "undated". "Weighted index of graph efficiency improvements for a by-production technology and its application to Indian coal-based thermal power sector," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 18-08, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    13. Sushama Murty & Resham Nagpal, "undated". "Measuring output-based technical efficiency of Indian coal-based thermal power plants: A by-production approach," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 18-07, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    14. F. Ang & K. H. Dakpo, 2021. "Comment: Performance measurement and joint production of intended and unintended outputs," Journal of Productivity Analysis, Springer, vol. 55(3), pages 185-188, June.
    15. Fang, Lei, 2020. "Opening the “black box” of environmental production technology in a nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 286(2), pages 769-780.
    16. Jean-Philippe Boussemart & Hervé Leleu & Zhiyang Shen & Vivian Valdmanis, 2020. "Performance analysis for three pillars of sustainability," Journal of Productivity Analysis, Springer, vol. 53(3), pages 305-320, June.
    17. Førsund, Finn, 2019. "Environmental Performance Measurement: The Rise and Fall of Shephard-inspired Measures," Memorandum 9/2019, Oslo University, Department of Economics.
    18. Juan Aparicio & Magdalena Kapelko & Lidia Ortiz, 2021. "Modelling environmental inefficiency under a quota system," Operational Research, Springer, vol. 21(2), pages 1097-1124, June.
    19. Aparicio, Juan & Ortiz, Lidia & Santín, Daniel, 2021. "Comparing group performance over time through the Luenberger productivity indicator: An application to school ownership in European countries," European Journal of Operational Research, Elsevier, vol. 294(2), pages 651-672.
    20. Sushama Murty & R. Robert Russell, 2021. "A commentary on “Performance measurement and joint production of intended and unintended outputs” by Finn Førsund," Journal of Productivity Analysis, Springer, vol. 55(3), pages 177-184, June.
    21. Førsund, Finn R, 2017. "Pollution Meets Efficiency: Multi-equation modelling of generation of pollution and related efficiency measures," Memorandum 09/2017, Oslo University, Department of Economics.
    22. Moriah Bostian & Rolf Färe & Shawna Grosskopf & Tommy Lundgren, 2022. "Prevention or cure? Optimal abatement mix," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(4), pages 503-531, October.

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    More about this item

    Keywords

    Emission-generating technologies; By-production technologies; Free input and output disposability; Costly disposability; Distance function;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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