Alternative Measures of Environmental Technology Structure in DEA

European Journal of Operational Research, Vol. 215, No. 3, pp. 750-762, December 2011

Posted: 6 Feb 2012

See all articles by Biresh Sahoo

Biresh Sahoo

Xavier Institute of Management

Mikuláš Luptáčik

Vienna University of Economics and Business - Department of Economics

Bernhard Mahlberg

Institute for Industrial Research (IWI); Vienna University of Economics and Business - Institute for Production Management

Date Written: 2011

Abstract

The nonparametric data envelopment analysis (DEA) literature on environmental efficiency (EE) considers handling undesirable outputs in two alternative ways: either in their original forms with the assumption that these are weakly disposable or in various translated forms with the assumption that these are strongly disposable. Choosing a particular approach implies adoption of a particular, distinct treatment of undesirable outputs, and hence yields a distinct set of EE estimates. To explore the effects of the interplay between choice of EE measure and specific treatment of undesirable outputs, this paper attempts to generate all possible output-oriented EE measures based on these two alternative approaches. Furthermore, guided by the argument that slacks are important in identifying properly the efficiency behavior of firms, it proposes two new alternative, slacks-based formulations of EE: one based on the range directional model, and the other on the generalized proportional distance function model. Using a confected data set of ten firms and a real-life data set of 22 OECD countries, our empirical analysis reveals that: first, EE scores are influenced not only by the choice of disposability assumption for undesirable outputs but also by the way these are treated in various translated forms; second, the choice of any particular treatment of undesirable outputs plays no role in influencing the rankings of firms; and third, our two new alternative EE formulations are, at the least, viable alternatives to existing EE measures in ranking firms according to their eco-efficiency behavior.

Keywords: Data envelopment analysis, Environmental technology, Environmental efficiency, Undesirable outputs, Weak disposability

Suggested Citation

Sahoo, Biresh K. and Luptáčik, Mikuláš and Mahlberg, Bernhard, Alternative Measures of Environmental Technology Structure in DEA (2011). European Journal of Operational Research, Vol. 215, No. 3, pp. 750-762, December 2011. Available at SSRN: https://ssrn.com/abstract=1999191

Biresh K. Sahoo (Contact Author)

Xavier Institute of Management ( email )

Xavier Square
Bhubaneswar, 751 013
India
+91 674 6647 735 (Phone)

HOME PAGE: http://hib.xub.edu.in/Hibiscus/Pub/faccvDet.php?client=xu&facid=XF325

Mikuláš Luptáčik

Vienna University of Economics and Business - Department of Economics ( email )

Augasse 2-6
A-1090 Wien
Austria

Bernhard Mahlberg

Institute for Industrial Research (IWI) ( email )

Mittersteig 10/4
Vienna, 1050
Austria
+43 1 513 44 11 0 (Phone)
+43 1 513 44 11 2099 (Fax)

HOME PAGE: http://www.iwi.ac.at/

Vienna University of Economics and Business - Institute for Production Management ( email )

Welthandelsplatz 1
Building D2, Entrance C, 3rd floor
Vienna, 1020
Austria
+43 1 313 36 - 5615 (Phone)

HOME PAGE: http://https://www.wu.ac.at/en/prodmanengl/

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