Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs

• Published in: American journal of agricultural economics Vol. 87; no. 4; pp. 1077 - 1082
• Main Author: Kuosmanen, Timo
• Format: Journal Article
• Language: English
• Published: Malden Oxford University Press 01-11-2005; American Agricultural Economics Association; Blackwell Publishing Ltd
• Subjects: activity analysis; Agricultural economics; Air pollution; Artists models; Business activity analysis; C510; Commercial production; Convexity; Data envelopment analysis; Economic models; Emissions; Environmental economics; Environmental Economics and Natural Resources; Environmental Economics and Natural Resources Group; environmental performance analysis; Green economics; Leerstoelgroep Milieu-economie en natuurlijke hulpbronnen; Milieu-Economie en Natuurlijke Hulpbronnen; Modeling; nonparametric productivity analysis; Pollutant emissions; pollution abatement; Pollution control; production theory; Productivity; Q530; Studies; Sustainable agriculture; undesirable outputs; WIMEK; nonparametric productivity analysis; environmental performance analysis; Q530; data envelopment analysis; pollution abatement; undesirable outputs; activity analysis; production theory; C510
• ISSN: 0002-9092; 1467-8276
• DOI: 10.1111/j.1467-8276.2005.00788.x

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.