A state-level resource allocation model for emission reduction and efficiency improvement in thermal power plants

Subhash C. Ray () and Shilpa Sethia ()
Additional contact information
Subhash C. Ray: University of Connecticut
Shilpa Sethia: University of Connecticut

Indian Economic Review, 2024, vol. 59, issue 1, No 8, 205-257

Abstract: Abstract This paper develops a framework for centralized allocation of resources and production targets among firms that produce a bad output side-by-side with a good output. The production technology is specifically defined for thermal power generation sector that produces one good output (electricity) and one bad output (stack emissions) with one polluting input (coal) and two neutral inputs (installed capacity of power plants and labor). The undesirable output is modeled as an incidental by-product resulting from use of the polluting input. We use a modified Directional Distance Function of Aparicio et al. (Eur J Oper Res 226:154–162, 2013), formulated with nonparametric data envelopment analysis, to determine the extent by which good output can be increased in each region while minimizing the use of polluting inputs and the level of bad output, by increasing efficiency through reallocation. For empirical illustration, we use the data from major coal-fired power plants in India for fiscal years 2005–06 through 2014–15. Each state within India is treated as a regional jurisdiction within which inputs (only coal and labor) and outputs are reallocated under alternative structural assumptions. Our findings reveal that the thermal power sector is suboptimal, leaving a scope for emission reduction and increase in power generation in different states of India.

Keywords: By-production; Joint disposability; Bad outputs; Centralized resource allocation (search for similar items in EconPapers)
JEL-codes: C61 L94 Q53 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s41775-024-00214-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:inecre:v:59:y:2024:i:1:d:10.1007_s41775-024-00214-2

Ordering information: This journal article can be ordered from
https://www.springer.com/economics/journal/41775

DOI: 10.1007/s41775-024-00214-2

Access Statistics for this article

Indian Economic Review is currently edited by Uday Bhanu Sinha, Abhijit Banerji, Shreekant Gupta and J.V. Meenakshi

More articles in Indian Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().