The weak disposability of undesirable outputs implies that the
desirable output decreases when the emission of the pollutants or the
undesirable outputs is reduced. The following assumption satisfies the
criterion of weak disposability of undesirable outputs:
(xxii)
∂ ln Do( xk, yk )/
∕∂ ln ykm
≤ 0,
m =i +1,......,M; k = 1,......,K
In addition to the above constraints we also impose the
homogeneity and symmetry constraints into the model which can be
represented as
M MM
( xxiii)
∑α m = 1, ∑Y nm = ∑α mm ' = 0, for al1 m, n
m = 1 m = 1 m′ = 1
and
(xxiv) KK α = α , β = β , forall m, m′, n and n′
mm m m , nn n n , , ,
Equations (xix) - (xxiv) represent the model we shall use to
derive the shadow prices of the undesirable output. The model is solved
using the GAMS programming tool developed by Brooke et., al. (1992).
IV. Data and Estimation Procedure
The empirical analysis is based on primary data collected from
the coal fired thermal plants under the Calcutta State Electricity Supply
Corporation (CESC), West Bengal Power Development Corporation
Limited (WBPDCL), and Damodar Valley Corporation (DVC) in the
eastern region of India. These coal fired thermal plants are a part of the
Eastern Grid.3 We have collected detailed time series data on the inputs
and outputs for the years 1991-92 to 1999-2000 for all the thermal plants
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