Capacity utilization in a generalized Malmquist index including environmental factors. A decomposition analysis

Torstein Bye, Annegrete Bruvoll () and Jan Larsson

Discussion Papers from Statistics Norway, Research Department

Abstract: Productivity measures ignoring environmental effects may give misleading information on total productivity growth. Further, business cycles in the form of capacity utilization may also significantly influence productivity measures. In this paper, we develop an overall Malmquist productivity index and decompose changing efficiency rates into a contribution from environmental factors, capacity utilization and other traditional factors. The capacity utilization element is a contribution to the literature in that it takes into account the capacity for producing negative externalities. We decompose the frontier movements into a contribution from traditional factors and environmental factors and apply the model to a micro data set for two Norwegian industries: the pulp and paper industry and the inorganic chemistry industry. We find frontier improvements over the period included in the analysis, while the distance to the frontier has increased. Capacity utilization increased over the period and contributed to an average approach to the frontier, while environmental indicators contributed negatively. Analysis of the two industries indicates that differences between the traditional and revised efficiency measures changes are ambiguous, except from the capacity utilization element. This indicates that the environment loses when business cycles improve.

Keywords: Emissions; Productivity change; Pulp and paper; Inorganic chemistry; Malmquist index; Frontier technology; Capacity utilization (search for similar items in EconPapers)
JEL-codes: L73 O12 O14 O33 O41 Q48 R38 (search for similar items in EconPapers)
Date: 2006-09
New Economics Papers: this item is included in nep-eff and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Capacity Utilization in a Generalized Malmquist Index Including Environmental Factors: A Decomposition Analysis (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:473

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