Abstract
The environmental sustainability is a globally important issue, particularly in the global warming. There are many institutions and people who are interested in the greenhouse gases emissions issue and policies that attempt to improve the problem. The aviation industry is not an exception. Under this background, there has been much research on airport efficiency analysis, undesirable outputs, and on evaluating productivity with respect to environmental factors. In the efficiency analysis models with the undesirable outputs in the airports, there are two main types of production possibility frontiers. The first type is the frontier based on the Shephard technology, which involves a weak-disposability concept, using a single abatement factor. The second one is the frontier on the Lozano-Gutiérrez technology, which tries to take the weak disposability into account by regarding the undesirable outputs as input. However, they have limitations. Additionally, no study has provided how to apply weak disposability correctly. To find out the limitations and give standard to utilize weak disposability, we compare models with two issues that must be scrutinized. In this paper, we show that these two concepts have limitations in making the production possibility area. To overcome this limitation, we propose an undesirable-output model using multiple abatement factors based on weak disposability with the slack-based measure (SBM) approach. We analyze, comparatively, the different social efficiency performances according to two issues among the three approaches in estimating production possibility frontier, using the Shepard model, the Lozano-Gutierrez model, and our proposed model. To provide correct standard of measurement and apply characteristics of undesirable outputs, we study not only theoretically, but also empirically, with data from Korea’s 13 domestic airports.
Highlights
Environmental issues are of crucial importance, and many institutes and countries have implemented strict regulation and management criteria
A single abatement factor makes variables contract in the same proportion but cannot make them move in the same direction to increase or decrease together
The Shephard technology assumes weak disposability as a property of undesirable outputs and provides a production possibility function (PPF) using an equality in the equation of undesirable outputs (w) and a single abatement factor (θ)
Summary
Environmental issues are of crucial importance, and many institutes and countries have implemented strict regulation and management criteria. Previous studies have suggested various standards for estimating eco-efficiency based on models using undesirable outputs. Previous studies in aviation industry have estimated the production possibility area of undesirable-output models based mainly on two perspectives. In spite of the limitations, previous studies accept the perspectives without question In this context, this paper compares perspectives and undesirable-output models mainly used in the aviation industry and suggests a model that mitigates limitations of conventional models by employing weak disposability and multiple abatement factors (Abatement factor is a variable which allows outputs to reduce to a decreased level of production activity and it forces desirable and undesirable outputs to contract together, when the level of a production activity decrease).
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