Efficiency and Environmental Regulation: A "Complex Situation"

Andres Picazo-Tadeo and Diego Prior

No 502, Working Papers from Departament Empresa, Universitat Autònoma de Barcelona

Abstract: Production of desirable outputs is often accompanied by undesirable byproducts that have damaging effects on the environment, and whose disposal is frequently regulated by public authorities. In this paper, we compute directional technology distance functions under particular assumptions concerning disposability of bads in order to test for the existence of what we call ‘complex situations’, where the biggest producer is not the greatest polluter. Furthermore, we show that how in such situations, environmental regulation could achieve an effective reduction in the aggregate level of bad outputs without reducing the production of good outputs. Finally, we illustrate our methodology with an empirical application to a sample of Spanish tile ceramic producers.

Keywords: Environmental regulation; Efficiency; Disposability of bads. (search for similar items in EconPapers)
JEL-codes: C61 D21 L68 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2005-02, Revised 2005-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Working Papers at the Department of Business, April 2005 pages 1-29

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