Congestion measurement for regional industries in China: A data envelopment analysis approach with undesirable outputs

The industry in China has been developing extensively in the last few decades. Large investments in China's industry may cause congestion because congestion is a widely observed economic phenomenon in such a scenario. In order to know the performance and allocate resources well, it is necessary for the Chinese government to measure congestion of the industry. Many scholars have studied this topic by means of data envelopment analysis (DEA). However, previous studies only pay attention to the framework of desirable outputs. In fact, undesirable outputs often accompany desirable outputs in production. Thus, in this study, a new approach for measuring congestion with undesirable outputs is proposed and applied to analyzing congestion of the industry in 31 administrative regions of China. The results show that five regions have congestion in their industry in 2010. Besides, the regions located in the east of the country perform the best in ecological efficiency, followed by regions in central and west China. Based on these findings, this paper proposes some political schemes to improve regional industrial efficiency.

► A new approach for measuring congestion with undesirable outputs is proposed.
► Congestion of the industry in 33 administrative regions of China is analyzed.
► The results show that five regions have congestion in their industry in 2010.
► This paper proposes some political schemes to improve industrial efficiency.