EPRG 0716

Hongliang Yang, Michael Pollitt

Incorporating Undesirable Outputs into Malmquist TFP Index: Environmental Performance Growth of Chinese Coal-Fired Power Plants

EPRG 0716 Non-Technical Summary | PDF

Also published in:

  • Yang, H. and Pollitt, M. (2012), ‘Incorporating undesirable outputs into Malmquist TFP indices with an unbalanced data panel of Chinese power plants’, Applied Economics Letters, Vol.19, Issue 3, February, pp. 277-283

Abstract: In this article we examine the effects of undesirable outputs on the Malmquist TFP indices. Our empirical work uses an unbalanced panel which covers 796 utility and non-utility coal-fired power plants in China during 1996-2002. In order to meet the requirement of a balanced panel for calculating the Malmquist indices, an innovative fake unit approach has been introduced. Our final results show that (1) the growth of the Chinese electricity heavily depends upon an increase of resource input; and (2) huge potential remains with regards to the efficiency improvement and emissions control in Chinese coal-fired power plants.

Keywords: Malmquist indicies, total factor productivity, Chinese electricity, power plant efficiency.

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