Productivity and Undesirable Outputs: A Directional Distance Function Approach

Yangho Chung and Rolf Fare
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Yangho Chung: Southern Illinois Univ. at Carbondale
Rolf Fare: Southern Illinois Univ. at Carbondale

Microeconomics from EconWPA

Abstract: Undesirable outputs are often produced together with desirable outputs. This joint production of good and bad outputs brings about a difficulty for productivity measurement. Here we introduce a directional distance function and use it as a component in a new productivity index. This index, as an empirical example shows, seems to solve the problem caused by the joint production of good and bad outputs.

Keywords: productivity & efficiency measurement; joint products; distance functions (search for similar items in EconPapers)
JEL-codes: D1 D2 D3 D4 (search for similar items in EconPapers)
Date: 1995-11-07, Revised 1995-11-09
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