Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 30/2008: Good Modelling of Bad Outputs: Pollution and Multiple-Output Production
Finn R. Førsund ()
Additional contact information
Finn R. Førsund: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Abstract: The materials balance principle points to the crucial role of material inputs in generating residuals in production processes. Pollution modelling must be of a multi-output nature. The most flexible transformation function in outputs and inputs used in textbooks is too general to make sense in pollution modelling. Specifying bads as if they are inputs, although may be defendable on a macro level as a reduced form, hides explicit considerations of various modification activities. Extending the non-parametric efficiency approach to cover bads as outputs, assuming weak disposability of the bads as the only change in the modelling of the technology, has serious weaknesses. A complete taxonomy of inputs as to the impact on both residuals and marketed products as joint outputs is derived, based on factorially determined multi-output production, thus providing information for choice of policy instruments.
Keywords: Multiple-output production; pollution; bads; purification; DEA
41 pages, December 1, 2008
Full text files
Memo-30-2008.pdf
- Published as
- Finn R. Førsund, (2009), 'Good Modelling of Bad Outputs: Pollution and Multiple-Output Production', International Review of Environmental and Resource Economics, vol 3, pages 1-38
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