Productivity and Undesirable Outputs: A Directional Distance Function Approach

Productivity and Undesirable Outputs: A Directional Distance Function Approach Undesirable outputs are often produced together with desirable outputs. This joint production of good and bad outputs is typically ignored in traditional measures of productivity since “prices” are typically unavailable for bad outputs. Here we introduce a directional distance function and use it as a component in a new productivity index that readily models joint production of goods and bads, credits firms for reductions in bads and increases in goods, and does not require shadow prices of bad outputs. This index, as an empirical example shows, solves the problem caused by the joint production of good and bad outputs, and provides a practical managerial tool. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Environmental Management Elsevier

Productivity and Undesirable Outputs: A Directional Distance Function Approach

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Publisher
Elsevier
Copyright
Copyright © 1997 Academic Press
ISSN
0301-4797
D.O.I.
10.1006/jema.1997.0146
Publisher site
See Article on Publisher Site

Abstract

Undesirable outputs are often produced together with desirable outputs. This joint production of good and bad outputs is typically ignored in traditional measures of productivity since “prices” are typically unavailable for bad outputs. Here we introduce a directional distance function and use it as a component in a new productivity index that readily models joint production of goods and bads, credits firms for reductions in bads and increases in goods, and does not require shadow prices of bad outputs. This index, as an empirical example shows, solves the problem caused by the joint production of good and bad outputs, and provides a practical managerial tool.

Journal

Journal of Environmental ManagementElsevier

Published: Nov 1, 1997

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