Journal
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
Volume 87, Issue 4, Pages 1077-1082Publisher
WILEY
DOI: 10.1111/j.1467-8276.2005.00788.x
Keywords
activity analysis; data envelopment analysis; environmental performance analysis; nonparametric productivity analysis; pollution abatement; production theory; undesirable outputs
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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.
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