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Environmental Efficiency Measurement with Translog Distance Functions: A Parametric Approach

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  • Cuesta, Rafael A.

    () (Departamento de Economía, Universidad de Oviedo, E-33071, Oviedo, Spain.)

  • Knox, C.A.

    () (Department of Economics, Terry College of Business, University of Georgia, Athens, GA 30602, USA)

  • Zofío, José Luis

    () (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

Abstract

We use a flexible parametric hyperbolic distance function to estimate environmental efficiency when some outputs are undesirable. Cuesta and Zofio (J. Prod. Analysis (2005), 31-48) introduced this distance function specification in conventional input-output space to estimate technical efficiency within a stochastic frontier context. We extend their approach to accommodate undesirable outputs and to estimate environmental efficiency within a stochastic frontier context. This provides a parametric counterpart to Färe et al.’s popular nonparametric environmental efficiency measures (Rev. Econ. Stat. 75 (1989), 90-98). The distance function model is applied to a panel of U.S. electricity generating units that produce marketed electricity and non-marketed SO2 emissions.

Suggested Citation

  • Cuesta, Rafael A. & Knox, C.A. & Zofío, José Luis, 2007. "Environmental Efficiency Measurement with Translog Distance Functions: A Parametric Approach," Working Papers in Economic Theory 2007/02, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
  • Handle: RePEc:uam:wpaper:200702
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    References listed on IDEAS

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    Keywords

    Undesirable outputs; parametric distance functions; stochastic frontier analysis; environmental efficiency;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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