Abstract
The measurement of environmental inefficiency that assesses economic sectors’ performance integrating the production of both marketed (good) outputs and the negative environmental externalities (bad outputs) is an increasingly important focus of recent economic research. This study assesses environmental inefficiency of the world construction industry over the period 2000-2014. The study’s contributions are twofold. In differentiation to previous research on the environmental inefficiency in the construction industry, this study relies on the latest so called by-production model that in the inefficiency measurement considers two separate and parallel technologies: a standard technology generating good outputs, and a polluting technology for the by-production of bad outputs. Moreover, the focus on the construction industry in forty two world developed and developing countries is the second contribution of this study. The results indicate more inefficiency in the generation of bad outputs than in the production of good outputs for the vast majority of countries.
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