Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs

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Abstract

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.
Original languageEnglish
Pages (from-to)1077-1082
JournalAmerican Journal of Agricultural Economics
Volume87
Issue number4
DOIs
Publication statusPublished - 2005
MoE publication typeA1 Journal article-refereed

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