Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs

Timo Kuosmanen

American Journal of Agricultural Economics, 2005, vol. 87, issue 4, 1077-1082

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. Copyright 2005, Oxford University Press.

Date: 2005
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