Accounting for externalities and disposability: A directional economic environmental distance function

Nicole Adler, Nicola Volta*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

31 Scopus citations

Abstract

The existence of positive and negative externalities ought to be considered in a productivity analysis in order to obtain unbiased measures of efficiency. In this research we present an additive style, data envelopment analysis model that considers the production of both negative and positive externalities and permits a limited increase in input utilisation where relevant. The directional economic environmental distance (DEED) function is a unified approach based on a linear program that evaluates the relative inefficiency of the units under examination with respect to a unique reference technology. We discuss the impact of disposability assumptions in depth and demonstrate how different versions of the DEED model improve on models presented in the literature to date.

Original languageAmerican English
Pages (from-to)314-327
Number of pages14
JournalEuropean Journal of Operational Research
Volume250
Issue number1
DOIs
StatePublished - 1 Apr 2016

Bibliographical note

Publisher Copyright:
© 2015 Elsevier B.V. and Association of European Operational Research Societies (EURO) within the International Federation of Operational Research Societies (IFORS). All rights reserved.

Keywords

  • Additive measure
  • Data envelopment analysis
  • Disposability
  • Environment
  • Negative externalities

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