Carl A. Pasurka

Multilateral Productivity Comparisons When Some Outputs are Undesirable: A Nonparametric Approach

Multilateral productivity comparisons of firms producing multiple outputs, some of which are undesirable, are obtained by making two modifications to the standard Farrell approach to efficiency measurement. The restriction that production technology satisfy strong disposability of outputs is relaxed to allow for the fact that undesirable outputs may be freely disposable, and the efficiency measures are modified to allow for an asymmetric treatment of desirable and undesirable outputs. Performance measures that satisfy these requirements are calculated as solutions to programming problems. The methodology is applied to a sample of mills producing paper and pollutants.

Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation

A nonparametric frontier approach is used to calculate the overall, technical, pure technical, allocative, and scale efficiencies for a sample of 322 independent banks. The sample was drawn from the Federal Deposit Insurance Corporation tapes on the Reports of Condition and Reports of Income (Call Reports) for the year 1986. The results indicated a low level of overall efficiency. The main source of inefficiency was technical in nature, rather than allocative. Separate efficiency frontiers were constructed to test the effect of branching. However, the distributions of efficiency measures for branching and non-branching banks were not found to be different.

The technical efficiency of US banks

Abstract The paper uses a non-parametric frontier approach to measure the technical efficiency of a sample of U.S. banks. The results indicate that these banks could have produced the same level of output with only 70% of the inputs actually used. In addition, most of this inefficiency is due to pure technical inefficiency (wasting inputs) rather than scale inefficiency (operating at non-constant returns to scale). Finally, regression analysis indicates that the technical efficiency of the banks is positively related to size, negatively related to product diversity, and not at all related to the extent to which branch banking is allowed.

Effects on relative efficiency in electric power generation due to environmental controls

Abstract In this paper, we model the effects of environmental controls when these are viewed as restricting disposal of outputs. We specify an unregulated and a regulated multi-output technology satisfying strong (free) disposability of outputs and weak (restricted) disposability of outputs, respectively, By comparing the relative productive efficiency of firms using restricted and unrestricted technologies we derive a measure or index of the effect of environmental regulation. We employ recently developed programming models to calculate this measure of the cost of environmental controls for a sample of steam electric plants in the U.S.

Substitutability among undesirable outputs

In recent years, economists have started to move beyond calculating regulatory effects on a pollutant-by-pollutant basis since their interaction is important. In this study, we take up this issue. To allow for joint production of multiple pollutants and marketable output, we specify our technology using a directional distance function. This allows us to treat pollutants as joint outputs, yet accounts for their ‘undesirability’. We estimate the distance function for a sample of coal-fired electric power plants from 1985 to 1998, which includes the first 4 years of Phase I of the Clean Air Act Amendments of 1990. We focus on the interaction between SO2 and NO x , as they became more highly regulated and estimate shadow prices of the pollutants and the Morishima elasticity of transformation between two pollutants, NO x and SO2, as well as with respect to the desirable output, kilowatt-hours of electricity. As expected, we find that power plants increase NO x emissions as they decrease SO2, i.e. they are substitutes.

Joint Production of Good and Bad Outputs with a Network Application

This article surveys the literature on the joint production of good and bad outputs. Recently, material balance has arisen as an issue in this literature, as a restriction on the technology, which also we address. We use our preferred specification of joint production technology and estimate the efficiency of US electric utilities in a network setting. This network allows one to specify two subtechnologies, one of which is an abatement technology.

Perspectives on Pollution Abatement and Competitiveness: Theory, Data, and Analyses

The implementation of environmental regulations has raised concerns about the effect of pollution abatement on the competitiveness of firms, industries, and nations. These concerns have led to efforts to assess the relationship between pollution abatement and competitiveness. This article presents national- and industry-level data on pollution abatement costs and emissions, and discusses the theoretical and empirical literature on the link between pollution abatement and competitiveness. The article first reviews theoretical perspectives on the link between competitiveness and pollution abatement. Next, historical data on pollution abatement costs and emissions across nations and industries are summarized. Finally, the article reviews the empirical evidence on the link between pollution abatement and indicators of competitiveness.

CGE model of pollution abatement processes for assessing the economic effects of environmental policy

Abstract We use a computable general equilibrium (CGE) model to investigate the impacts of environmental regulations on the German economy. Our assessment differs from most previous CGE studies of environmental policy in that our model is based on a dataset in which the specific inputs used for pollution abatement processes are in input-output matrix form. This allows us to model pollution abatement processes more accurately. We use the model to compare the impacts of environmental policy to the impacts of tariffs, non-tariff barriers (NTBs) and production subsidies. At a minimum, the impacts of environmental programs on the German economy are comparable to these other distortionary government policies. Depending upon the source of capital stock for complying with environmental regulation, the economic impacts may be substantially larger than those observed for other economic policies.

Technical change and pollution abatement costs

There is continuing interest in the trend of costs associated with pollution abatement activities. We specify an environmental production technology to model the joint production of good and bad outputs. The joint production model calculates pollution abatement costs and identifies changes in these costs associated with: (1) technical change, (2) input changes, and (3) changes in bad output production. Estimates of the relative importance of each factor are estimated using data from 1995 to 2005 for a sample of coal-fired power plants in the United States. Finally, we discuss the potential usefulness of the decomposition model for identifying discrepancies between ex ante and ex post pollution abatement costs that are linked to the underlying joint production model.

Estimating Pollution Abatement Costs: A Comparison of 'Stated' and 'Revealed' Approaches

Surveys have been the principal method used to estimate costs associated with environmental regulations in the United States. Although surveys have been widely used, there are concerns about their accuracy. In order to investigate the accuracy of survey estimates of pollution abatement costs, a joint production model is specified and data from electric power plants in the United States for 1994 and 1995 are used to estimate pollution abatement costs incurred by these plants. The estimates of pollution abatement costs generated by the joint production model are then compared with survey estimates of pollution abatement costs incurred by power plants.