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Efficiency and Environmental Regulation: A "Complex Situation"

Author

Listed:
  • Andrés J. Picazo-Tadeo

    (Universitat de València. Dpto. Economía Aplicada II.)

  • Diego Prior

    (Universitat Autònoma de Barcelona. Dpto. Economia de l’Empresa.)

Abstract

Production of desirable outputs is often accompanied by undesirable byproducts that have damaging effects on the environment, and whose disposal is frequently regulated by public authorities. In this paper, we compute directional technology distance functions under particular assumptions concerning disposability of bads in order to test for the existence of what we call ‘complex situations’, where the biggest producer is not the greatest polluter. Furthermore, we show that how in such situations, environmental regulation could achieve an effective reduction in the aggregate level of bad outputs without reducing the production of good outputs. Finally, we illustrate our methodology with an empirical application to a sample of Spanish tile ceramic producers.

Suggested Citation

  • Andrés J. Picazo-Tadeo & Diego Prior, 2005. "Efficiency and Environmental Regulation: A "Complex Situation"," Working Papers 0502, Departament Empresa, Universitat Autònoma de Barcelona, revised Feb 2005.
    • Handle: RePEc:bbe:wpaper:0502
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Tae-Woong Yang & Joon-Ho Na & Hun-Koo Ha, 2019. "Comparative Analysis of Production Possibility Frontier in Measuring Social Efficiency with Data Envelopment Analysis: An Application to Airports," Sustainability, MDPI, vol. 11(7), pages 1-18, April.

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    More about this item

    Keywords

    Environmental regulation; Efficiency; Disposability of bads.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables

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