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


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
Issue number1
StatePublished - 1 Apr 2016

Bibliographical note

Funding Information:
We would like to thank Gianmaria Martini, Ole Bent Olesen, Niels Christian Petersen and Ekaterina Yazhemsky for extensive help and continuous interest in our work. We also thank the participants of the ORSIS 2014 conference and the DEA 2013 Workshop for their valuable advice. Finally, we thank the Recanati Fund and the Fondazione Cariplo for partial funding of this research.

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.


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


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