Eco-efficiency analysis of consumer durables using absolute shadow prices.

Kortelainen, Mika; Kuosmanen, Timo

We develop a method for eco-efficiency analysis of consumer durables that is based on Data Envelopment Analysis (DEA). In contrast to previous product efficiency studies, we consider the measurement problem from the policy perspective. The innovation of the paper is to measure efficiency in terms of absolute shadow prices that are optimized endogenously within the model to maximize efficiency of the good. Thus, the efficiency measure has a direct economic interpretation as a monetary loss due to inefficiency, expressed in some currency unit. The advantages as well as technical differences between the proposed approach and the traditional production-side methods are discussed in detail. We illustrate the approach by an application to eco-efficiency evaluation of Sport Utility Vehicles.

DURABLE consumer goods; DATA envelopment analysis; LINEAR programming; MATHEMATICAL programming; SHADOW prices; COST effectiveness; COST analysis; ECONOMIC efficiency; SPORT utility vehicles

Journal of Productivity Analysis, 2007, Vol 28, Issue 1/2, p57

0895-562X

Academic Journal

10.1007/s11123-007-0046-6