Energy Prices and Induced Technological Progress

This study measures energy price induced technological change using directional distance function for a panel data of 55 countries over the period 1974 to 2000. The parameter estimates of directional distance function reveal the absence of neutral exogenous innovations and the presence of biased innovations either it is exogenous or energy price induced. We observe larger energy price induced technological change effects in developed countries in comparison to developing countries in the periods after first (1974), and second (1980) world oil crisis that caused substantial energy price increases. These findings concur with data that show most R&D occurs in high-income countries, particularly the US and Japan.

Decomposition of total factor productivity growth: A regional analysis of Indian industrial manufacturing growth.

Total factor productivity (TFP) growth in industrial manufacturing is measured for 15 major Indian states for the period 1982-83 to 2000-01 using non-parametric linear programming methods. TFP growth is decomposed into efficiency and technological changes and also measure for the bias in technical change. The resulting information is used to examine whether the post-reform period shows any improvement in productivity and efficiency in comparison to the pre-reform one. Findings of the present exercise indicate the improvement in TFP. The recent change in TFP is governed by the technical progress in contrast to similar gain caused by the improvement in technical efficiency in the pre-reform regime. The technological progress in state manufacturing exhibited a capital using bias during the study period. Regional differences in TFP persist, although the magnitude of variation has declined in the post-reform period. Moreover, it is also found that there is a tendency of convergence in terms of TFP growth rate among Indian states during the post-reform years and only the states that were technically efficient at the beginning of the reform remain innovative.Industry ; Industrial manufacturing ; Growth ; Total factor productivity

Productivity and profitability changes in the U.S. electric power plants during SO2 trading regime.

We examine the productivity and profitability changes in the US electric generating plants during the SO2 trading regime. Input distance function is used to compute the cumulative Malmquist productivity and Fisher productivity indexes. By exploiting the duality between cost and input distance functions, we obtain a measure of profitability, as an approximation for the Fisher productivity index. We measure productivity and profitability changes when SO2 emissions are ignored in the production technology and when these emissions appear as bad output. We find that the productivity is higher when the bad outputs are modeled as weakly disposable in comparison to the situation when they are modeled as freely disposable. But we do not find any significant difference in profitability under these alternative methods of modeling of production technology concerning the disposability of bad outputs.Electricity generating plants ; Productivity ; Profitability ; SO2 ; Allowance program

Measurement of environmental efficiency and productivity: A cross country analysis.

This paper measures environmental efficiency (EE) and environmental productivity (EP) and analyses differences in these across countries. It explores the macroeconomic factors that could explain these differences and whether these differences can be explained by income levels and by the degree of openness in these countries. The EE index is found to be almost steady over the period 1971-92 for the annex-I countries, while its value is declining for non-annex-I countries over this period. The EP index increased over this period in both groups of countries. In the annex-I countries, EE exhibits an inverted `U' shape with respect to per capita income while it is `U' shaped for the non-annex-I countries. This study also finds that while the EP index increases with income in annex-I countries it is decreasing in the non-annex-I countries. The degree of openness has a significant negative impact on EE and EP in both groups of countries.Environmental efficiency ; Environmental productivity ; Distance function ; Per capita income ; Openness

Resource use efficiency of US electricity generating plants during the SO2 trading regime: A distance function approach.

This paper measures resource use efficiency of electricity generating plants in the United States under the SO2 trading regime. Resource use efficiency is defined as the product of technical efficiency and environmental efficiency, where the latter is the ratio of good output (electricity) to bad output (SO2) with reference to the best practice firm, i.e., one that is producing an optimal mix of good and bad outputs. This concept of environmental efficiency is similar to that of output oriented allocative efficiency. Using output distance functions we compare three methods for the calculation of resource use efficiency, namely, stochastic frontier analysis (SFA), deterministic parametric programming and nonparametric linear programming. This paper reveals the strengths and weaknesses of these methods for estimating efficiency. Both SFA and linear programming approaches can estimate the efficiency scores. For plants in the dataset the overall geometric mean of the three methods for technical efficiency, environmental efficiency and resource use efficiency is 0.737, 0.335 and 0.248, respectively. The rank correlation coefficient between technical efficiency, environmental efficiency and resource use efficiency is 0.213, 0.617 and 0.877, respectively. The regression analyses of performance across plants shows units in phase I of the SO2 trading programme are negatively related to measures of economic and environmental performance. This suggests that the market for SO2 allowances, per se, may not be minimizing compliance cost. We also find that a decrease in SO2 emission rates not only increases environmental efficiency but also leads to an increase in resource use efficiency. This finding concurs with the hypothesis that enhancement in the environmental performance of a firm leads to an increase in its overall efficiency of resource use as well.Technical efficiency ; Environmental efficiency ; Resource-use efficiency ; Distance functions ; SO2 allowance program