The effects of efficiency and TFP growth on pollution in Europe: a multistage spatial analysis

Abstract

It is common in e¢ ciency studies which analyse the environment for pollution to form part of the production technology. Pollution therefore a¤ects e¢ ciency and the TFP growth decomposition. As an alternative approach we draw on theoretical studies from the environmental economics literature, which demonstrate that TFP a¤ects environmental quality.Along these lines we adopt a two-stage empirical methodology. Firstly, we obtain two estimates of productive performance (e¢ ciency and TFP growth) using a stochastic production frontier framework in Stage 1 for European countries (1995 2008), from which we omit emissions. Secondly, in Stage 2 these measures of productive performance are used as regressors in spatial models of per capita nitrogen and sulphur emissions for European countries.From our preferred Stage 2 spatial models we …nd that a country's TFP growth must fall to reduce its per capita nitrogen and sulphur emissions. This is likely to be because nitrogen and sulphur emissions in the EU have been tightly regulated for a long period of time via air quality standards and consequently, substantial reductions in emissions from cleaner and more productive technology were achieved some time ago.

School district consolidation policies: endogenous cost inefficiency and saving reversals

“…Basically, these two models are subject to similar criticism that we discussed for Millimet and Collier (2008). In contrast to these studies, Adetutu et al (2014) and Glass et al (2013b) introduce spatial stochastic frontier models where distributional assumptions about the inefficiency are made. However, these models do not handle endogeneity.…”

A spatial autoregressive stochastic frontier model for panel data with asymmetric efficiency spillovers

“…Such a model which accounts for SAR dependence is therefore developed in this paper. To the best of our knowledge, Adetutu et al (2014) is the only study that introduces a spatial relationship into a stochastic frontier model where an assumption is made about the distribution of the ine¢ ciency component of the error structure. Their model, however, unlike the estimator we develop, overlooks global spatial dependence as they omit, for example, the endogenous SAR variable.…”

Spatial Econometric Analysis: Potential Contribution to the Economic Analysis of Smallholder Development

“…The most exciting recent methodological advances in measuring and decomposing TFP have been the studies by [1,[30][31][32]75]. These authors have merged methods common in the efficiency and productivity literature with spatial econometric methods in an innovative fashion.…”

“…Glass et al [31] decomposed TFP growth in 40 European countries using a spatial autoregressive frontier model. Adetutu et al [1] used a multistage spatial method to analyse the effects of efficiency and TFP growth on pollution in the same 40 European countries. Glass et al [32] blended traditional non-spatial stochastic frontier models with key contributions to spatial econometrics to develop a spatial autoregressive stochastic frontier model for panel data for 41 European countries.…”