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On the properties of an emission-generating technology and its parametric representation

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  • Sushama Murty

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Abstract

We propose a set of comprehensive axioms that seek to capture our intuitive understanding of the properties of an emission-generating technology (EGT). We show that an EGT that satisfies these axioms can be parametrically represented by more than one implicit production function that are derived from it. Here, these production functions take the form of distance functions first introduced by Shephard (Cost and production functions, Princeton University Press, Princeton, 1953 ) and Malmquist (Trabajos de estadistica 4:209–242, 1953 ). One of these production relations has properties of a neo-classical production function that shows how standard inputs are transformed into standard (intended) outputs. The remaining reflect trade-offs, observed in nature, between emissions, emission-causing goods, and cleaning-up activities of the producing unit. We illustrate this by considering two cases: (1) where each type of cleaning-up activity jointly mitigates all types of emissions and (2) where cleaning-up activities are emission-specific allowing also for the possibility that a cleaning-up activity, while helping to reduce certain emissions, can also contribute to more of some other types of emissions. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • 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.
  • Handle: RePEc:spr:joecth:v:60:y:2015:i:2:p:243-282
    DOI: 10.1007/s00199-015-0877-8
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    References listed on IDEAS

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    1. Murty, Sushama & Russell, R. Robert, 2010. "On modeling pollution-generating technologies," The Warwick Economics Research Paper Series (TWERPS) 931, University of Warwick, Department of Economics.
    2. Murty, Sushama, 2010. "Externalities and fundamental nonconvexities: A reconciliation of approaches to general equilibrium externality modeling and implications for decentralization," Journal of Economic Theory, Elsevier, vol. 145(1), pages 331-353, January.
    3. 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.
    4. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
    5. Fare, R. & Grosskopf, S. & Hernandez-Sancho, F., 2004. "Environmental performance: an index number approach," Resource and Energy Economics, Elsevier, vol. 26(4), pages 343-352, December.
    6. Shadbegian, Ronald J. & Gray, Wayne B., 2005. "Pollution abatement expenditures and plant-level productivity: A production function approach," Ecological Economics, Elsevier, vol. 54(2-3), pages 196-208, August.
    7. Pethig, Rudiger, 2006. "Non-linear production, abatement, pollution and materials balance reconsidered," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 185-204, March.
    8. Coggins, Jay S. & Swinton, John R., 1996. "The Price of Pollution: A Dual Approach to Valuing SO2Allowances," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 58-72, January.
    9. S Reinhard & G Thijssen, 2000. "Nitrogen efficiency of Dutch dairy farms: a shadow cost system approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(2), pages 167-186, June.
    10. 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.
    11. Murty, M.N. & Kumar, Surender, 2002. "Measuring the cost of environmentally sustainable industrial development in India: a distance function approach," Environment and Development Economics, Cambridge University Press, vol. 7(3), pages 467-486, July.
    12. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
    13. 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.
    14. Starrett, David A., 1972. "Fundamental nonconvexities in the theory of externalities," Journal of Economic Theory, Elsevier, vol. 4(2), pages 180-199, April.
    15. Forsund, Finn R., 2009. "Good Modelling of Bad Outputs: Pollution and Multiple-Output Production," International Review of Environmental and Resource Economics, now publishers, vol. 3(1), pages 1-38, August.
    16. 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.
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    Cited by:

    1. repec:eee:ejores:v:277:y:2019:i:1:p:377-390 is not listed on IDEAS
    2. repec:eee:ejores:v:266:y:2018:i:3:p:1000-1012 is not listed on IDEAS
    3. 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.
    4. repec:spr:empeco:v:54:y:2018:i:1:d:10.1007_s00181-016-1219-9 is not listed on IDEAS
    5. repec:eee:transa:v:116:y:2018:i:c:p:389-403 is not listed on IDEAS
    6. Dakpo, K Hervé & Latruffe, Laure, 2016. "Agri-environmental subsidies and French suckler cow farms’ technical efficiency accounting for GHGs," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236339, Agricultural Economics Society.
    7. Sushama Murty & R. Robert Russell, "undated". "Modeling emission-generating technologies: Reconciliation of axiomatic and by-production approaches," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 16-01, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    8. Dakpo, K Hervé, 2016. "On modeling pollution-generating technologies: a new formulation of the by-production approach," Working Papers 245191, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    9. K Hervé Dakpo, 2016. "On modeling pollution-generating technologies: a new formulation of the by-production approach," Working Papers SMART - LERECO 16-06, INRA UMR SMART-LERECO.
    10. repec:spr:envpol:v:19:y:2017:i:4:d:10.1007_s10018-016-0172-3 is not listed on IDEAS
    11. 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.

    More about this item

    Keywords

    Theory of production; Emission-generating technologies ; By-production; Free input and output disposability; Weak disposability; Costly disposability; Functional representations of multi-output production technologies; D20; D24; Q50;

    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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