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The impact of pollution abatement investments on production technology: new insights from frontier analysis

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  • Antonio Musolesi
  • Jean Pierre Huiban
  • Camilla Mastromarco
  • Michel Simioni

Abstract

This paper attempts to estimate the impact of pollution abatement investments on the production technology of firms by pursuing two new directions. First, we take advantage of recent econometric developments in productivity and efficiency analysis and compare the results obtained with two complementary approaches: parametric stochastic frontier analysis and conditional nonparametric frontier analysis. Second, we focus not only on the average effect but also on its heterogeneity across firms and over time and search for potential nonlinearities. We provide new results suggesting that such an effect is heterogeneous both within firms and over time and indicating that the effect of pollution abatement investments on the production process is not monotonic. These results have relevant implications both for modeling and for the purposes of advice on environmentally friendly policy.

Suggested Citation

  • Antonio Musolesi & Jean Pierre Huiban & Camilla Mastromarco & Michel Simioni, 2016. "The impact of pollution abatement investments on production technology: new insights from frontier analysis," Working Papers 2016025, University of Ferrara, Department of Economics.
    • Handle: RePEc:udf:wpaper:2016025
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    More about this item

    Keywords

    Pollution abatement investments; technology; stochastic frontier analysis; conditional nonparametric frontier analysis; generalized product kernels; eneralized local polynomial kernel regression;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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