Heterogeneous technologies, strategic groups and environmental efficiency technology gaps for European countries

Abstract

This paper measures technology (TG) and environmental efficiency technology gaps (EETGs) in 25 European countries over two distinct periods 2002 and 2008 examining the possible effect of adopted environmental regulations and the Kyoto protocol commitments on environmental efficiency technology gaps. However, the introduction of the metafrontier in our analysis puts into our discussion the role of heterogeneous technologies and its effect on the above-mentioned measures. Employing a directional distance function, we investigate whether there is an actual difference, in terms of environmental efficiency and efficiency performance, among European countries considering the technological frontiers under which they operate. The construction of individual frontiers has been realized employing a large number of variables that are highly correlated with countries' learning and absorbing capacity, new technological knowledge and using economic theory and classical frontier discrimination like developed vs. developing, North vs. South and participation in the Eurozone or not. The overall results indicate a crucial role of heterogeneous technologies for technology gaps in both periods. Moreover, a significant decrease for both measures, although in different percent, has been recorded emphasizing the key role of knowledge spillovers.