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Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs

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  • Timo Kuosmanen

Abstract

Weak disposability of outputs means that firms can abate harmful emissions by decreasing the activity level. Modeling weak disposability in nonparametric production analysis has caused some confusion. This article identifies a dilemma in these approaches: conventional formulations implicitly and unintentionally assume all firms apply uniform abatement factors. However, it is usually cost-effective to abate emissions in those firms where the marginal abatement costs are lowest. This article presents a simple formulation of weak disposability that allows for non-uniform abatement factors and preserves the linear structure of the model. Copyright 2005, Oxford University Press.

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  • Timo Kuosmanen, 2005. "Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1077-1082.
    • Handle: RePEc:oup:ajagec:v:87:y:2005:i:4:p:1077-1082
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2005.00788.x
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