The necessity of distinguishing weak and strong disposability among undesirable outputs in DEA: Environmental performance of Chinese coal-fired power plants

Different from previous efficiency researches, which normally assume a uniform disposability for all undesirable outputs in a production process, this paper proposes a model that distinguishes weak and strong disposability assumptions among various undesirable outputs based on their respective technical features. The paper illustrates the approach using a research sample covering 582 base-load Chinese coal-fired power plants in 2002. The final results show that imposing the technically correct disposability features on undesirable outputs makes a significant difference to the final efficiency evaluation. This suggests the necessity of properly distinguishing disposability features among undesirable outputs in a production process in efficiency models.