Weighted index of graph efficiency improvements for a by-production technology and its application to Indian coal-based thermal power sector

Sushama Murty () and Resham Nagpal ()
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Resham Nagpal: Jawaharlal Nehru University

Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers from Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India

Abstract: In contrast to conventional output-based efficiency indexes that hold input-levels fixed, a graph index of efficiency-improvements (EIs) is derived for a by-production technology by optimizing a weighted average of EIs in input and good and bad output-directions. Trade-offs, which determine optimal-EIs, arise between EIs in good and bad outputs when inefficiencies are removed in emission-causing input-directions. The optimal configurations of EIs for Indian coal-based thermal power plants depend on weights assigned and are correlated with output-based productive-efficiency (OBPE). EIs for plants with high OBPE is limited. With equal weights assigned to EIs in both outputs, optima of plants with moderate OBPE involve greatest EIs in coal-usage and CO2-generation, with no electricity-expansion, while most plants with low OBPE need focus only on electricity expansion with existing coal-usage. With increasing weight on CO2-reduction, EIs in coal-usage and emission-generation at existing electricity-levels become optimal for increasingly more plants, EIs being greatest for lowest-OBPE plants.

Pages: 52 pages
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