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Estimating the Materials Balance Condition: A Stochastic Frontier Approach

Hampf, Benjamin :
Estimating the Materials Balance Condition: A Stochastic Frontier Approach.
In: Darmstadt Discussion Papers in Economics (226) ISSN 1438-2733
[Article], (2015)

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Item Type: Article
Title: Estimating the Materials Balance Condition: A Stochastic Frontier Approach
Language: English
Abstract:

In this paper we propose a stochastic formulation of the materials balance condition which imposes physical constraints on production technologies. The estimation of the model involves a composed error term structure that is commonly applied in the literature on stochastic frontier analysis of productive effciency. Moreover, we discuss how OLS, maximum likelihood and Bayesian methods can be used to estimate the proposed model. In contrast to previous approaches our model allows to estimate the physical limitations to production possibilities in the presence of statistical noise and depends on substantially weaker data requirements. We demonstrate the applicability of our new approach by estimating the materials balance cndition for SO2 and CO2 using a sample of fossil-fueled power plants in the United States.

Alternative Abstract:
Alternative AbstractLanguage
In this paper we propose a stochastic formulation of the materials balance condition which imposes physical constraints on production technologies. The estimation of the model involves a composed error term structure that is commonly applied in the literature on stochastic frontier analysis of productive effciency. Moreover, we discuss how OLS, maximum likelihood and Bayesian methods can be used to estimate the proposed model. In contrast to previous approaches our model allows to estimate the physical limitations to production possibilities in the presence of statistical noise and depends on substantially weaker data requirements. We demonstrate the applicability of our new approach by estimating the materials balance cndition for SO2 and CO2 using a sample of fossil-fueled power plants in the United States.English
Journal or Publication Title: Darmstadt Discussion Papers in Economics
Number: 226
Alternative keywords:
Alternative keywordsLanguage
Materials balance condition; Abatement effciency; Stochastic frontier analysis; Laws of thermodynamics; Applied econometrics; Environmental economicsEnglish
Classification DDC: 300 Sozialwissenschaften > 330 Wirtschaft
Divisions: 01 Law and Economics
01 Law and Economics > Volkswirtschaftliche Fachgebiete
01 Law and Economics > Volkswirtschaftliche Fachgebiete > Emprical Economics
Date Deposited: 20 Apr 2015 15:25
Last Modified: 10 Mar 2016 10:44
URN: urn:nbn:de:tuda-tuprints-46990
Additional Information:

JEL classification: Q53, C51, Q40, D24

Additional Information:

JEL classification: Q53, C51, Q40, D24

URI: http://tuprints.ulb.tu-darmstadt.de/id/eprint/4699
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