Weak Disposability in Nonparametric Production Analysis: Reply to Färe and Grosskopf

Abstract

Färe and Grosskopf (this issue) claim that a single abatement factor suffices for modeling weak disposability in nonparametric production models, and that the Kuosmanen (2005) technology that uses multiple abatement factors is larger than necessary. This article demonstrates by a numerical example that a single abatement factor does not suffice to capture all feasible production plans, and that its use leads to the violation of convexity, one of the maintained assumptions of the model. We also prove that the Kuosmanen technology is the correct minimum extrapolation technology under the stated axioms.

A conditional directional distance function approach for measuring regional environmental efficiency: Evidence from UK regions

“…Finally, due to the fact that we have a small sample size (37 regions) it is therefore better for our analysis to use more robust scale assumptions. Still if a researcher wants to impose variables returns to scale in this model, it is suggested to read first the remarks raised by Kuosmanen (2005), Färe and Grosskopf (2009) and Kuosmanen and Podinovski (2009). 14 This is the most common assumption made for directional distance functions when measuring environmental efficiency levels.…”

Economic growth and environmental efficiency: Evidence from US regions

“…Following several authors (Kuosmanen, 2005;Kuosmanen and Podinovski, 2009;Podinovski and Kousmanen 2011) …”

Monitoring Bank Performance in the Presence of Risk

“…This technology was accurately represented in Kuosmanen (2005). Furthermore, Kuosmanen's specification is the VRS technology that most closely incorporates all observed activities and satisfies strong disposability of inputs and good outputs, weak disposability of bad outputs, and convexity (Kuosmanen and Podinovski 2009;Podinovski and Kuosmanen 2011). It can be defined as follows:…”