Weakly Disposable Formulations of Environmental Technology in Nonparametric Production Analysis

Introduction The variable returns to scale (VRS) based formulation of weakly disposable (WD) environmental technology is described in the nonparametric data envelopment analysis (DEA) literature in two alternative ways: either by a constant (uniform) abatement factor, or by differential (non-uniform) abatement factors.As argued by Kousmanen (2005), the conventional specification of WD technology based on uniform abatement factor goes against the usual observed operating practices of focusing abatement efforts in those firms where marginal abatement costs are lowest. To circumvent this, he proposed a more general specification of WD technology that allows for non-uniform abatement factors depending upon the degree of the marginal abatement costs by the firms. Both the specifications of WD technology have been critically debated with pros and cons. DOI: 10.5281/zenodo.337232

Policy Studies Economics and Business Administration

Abstract The phrase “add them up and divide by two (Tashite Ni De Waru, in Japanese) ” is an established maxim in Japanese society, and has its historical roots in Japanese culture. This means adopting a middle course between two competing proposals in order to avoid a conflict. In the spirit of Max Weber (1949), this paper establishes a systematically correct scientific proof of “add them up and divide by two ” (Add-Div), by using conceptions of the two OR methodologies, data envelopment analysis (DEA) and cooperative game theory. More specifically, in the DEA game scheme of Nakabayashi and Tone (2006), we study an allocation problem with two criteria, in which game-theoretic solutions such as the Shapley value and the nucleolus prove coincident with the result of the Add-Div method. While today some brilliant minds may propose that people should abandon the Add-Div mentality, this paper enables one to re-consider the concept of Add-Div not only as a matter of mentality but also as an application of OR methods. We also illustrate the use of the Add-Div concept where the “assurance region ” (AR) method of DEA is incorporated

Radial and non-radial decompositions of profit change: an application

Grifell-Tatje and Lovell (1999) made a contribution to the literature by decomposing profit change in extended radial DEA framework into six mutually exclusive components. Their approach appears to suffer from two shortcomings. First, radial models do not achieve full efficiency when slacks are present, and therefore, the contributions of each of these components are grossly underestimated. Second, evaluations of these components, using base-period prices as weights, can be potentially misleading. To circumvent over these shortcomings, we, first, introduce non-radial DEA models, and second, provide strong theoretical argument in favor of either current-period prices/average price of both periods as weights to be used to value the contributions of each of these components. The Indian banking sector is taken as a case study to illustrate the radial and non-radial decompositions of profit change so as to empirically examine the role of competition on profit change as well as its six mutually exclusive components. Our broad empirical results are as follows: First, radial and non-radial models yield diametrical opposite sign on the contributions of various components. Second, the increasing efficiency change trend in all ownership groups after 2002 indicates an affirmative gesture about the effect of the reform process on the performance of the Indian banking sector. Third, despite the fact that nationalized banks are the oldest banks, they do not reflect their learning experience in their output-and resource allocation behaviors.http://www.grips.ac.jp/list/facultyinfo/tone_kaoru

Nonparametric and Parametric Measures of Scale Elasticity: A Comparative Evaluation

In any competitive set up, policy recommendations based on elasticity parameters have assumed greater significance for the firm\u27s financial viability and success. So there is a need to examine with more prudence the elasticity estimates obtained from various parametric as well nonparametric methods. The main aim of this paper is first to critically examine these methods in order to shed light on what seems to be missing, and then to proceed by developing an empirically demanding ecompassing measure of scale elasticity. All these measures, which are finally applied to a panel data of US electric companies, constitute the empirical premise of this paper.Research supported by Grant-in-Aid for Scientific Research (C) Japan Society for the Promotion of ScienceFirst version: "A Comparative Evaluation of Parametric and Nonparametric Methods to Estimating Degree of Scale Economies" Tone, Kaoru; Sahoo, Biresh K., 2002/7/31http://www.grips.ac.jp/list/facultyinfo/tone_kaoru

GRIPS Policy Information Center Research Nonparametric and Parametric Measures of Scale Elasticity: A Comparative Evaluation Nonparametric and Parametric Measures of Scale Elasticity: A Comparative Evaluation

Abstract In any competitive set up, policy recommendations based on elasticity parameters have assumed greater significance for the firm's financial viability and success. So there is a need to examine with more prudence the elasticity estimates obtained from various parametric as well nonparametric methods. The main aim of this paper is first to critically examine these methods in order to shed light on what seems to be missing, and then to proceed by developing an empirically demanding ecompassing measure of scale elasticity. All these measures, which are finally applied to a panel data of US electric companies, constitute the empirical premise of this paper

Radial and non-radial decompositions of profit change: With an application to Indian banking

Grifell-Tatje and Lovell [Grifell-Tatje, E., Lovell, C.A.K., 1999. Profits and productivity. Management Science 45, 1177-1193] made significant contributions to the literature on the extended radial DEA framework by decomposing profit change into six mutually exclusive components. Their approach, however, poses two basic problems. First, the radial estimates on these components might give conflicting signals about the direction of profit change after the full radial efficiencies are achieved when slacks are present. Second, evaluations of these components, using base-period prices as weights, can be potentially misleading. To address these concerns, we first introduce non-radial DEA models, and then, provide a few strong theoretical arguments in favor of using as weights either current-period prices or an average price covering both periods to value the contributions of each of these components. The Indian banking sector is taken as a case study to illustrate the radial and non-radial decompositions of profit change so as to empirically examine the role of competition on profit change and its drivers. Our broad empirical results are as follows: first, radial and non-radial models yield diametrically opposite results on the contributions of various components. Second, the increasing efficiency change trends in all ownership groups after 2002 indicate that the Government reform process instituted on the banking industry has had a favorable effect on the performance of the Indian banking sector. Third, despite the fact that nationalized banks are the oldest banks, their output and resource allocation behaviors do not reflect their learning experience.Profits Productivity Indian banking DEA (radial and non-radial models)