Two-Stage Network Structures with Undesirable Intermediate Outputs Reused: A DEA Based Approach

Abstract

The rapid development in economy of China has intensified the country's many problems, such as environmental pollution and energy shortage. Thus, establishing a society with resource conservation and environmental harmony, typically reusing the pollution and waste from the industrial production, has attracted attention from both the government and the public in recent years. Data envelopment analysis (DEA) has been widely used in measuring two-stage network structures that constituted with homogenous decision making units. However, previous works failed to take the undesirable intermediate products into account in the two-stage network structures including production system and disposal system. In this study, we build an additive DEA approach to evaluate the efficiency of the proposed new two-stage network structures, and propose a better efficiency decomposition to the individual system. Finally, our approach is applied to analyze the industrial production in 30 provincial level regions in mainland China and some implications are given.