THE EFFECTS OF SULFUR-DIOXIDE CONTROLS ON PRODUCTIVITY CHANGE IN THE UNITED-STATES ELECTRIC-POWER INDUSTRY

Data envelopment analysis is used to compute a cumulative Malmquist input-based productivity index for coal-burning plants in the U.S. electric generating industry in the 1980s. We account for inputs used to control sulfur emissions as well as emissions outputs, and decompose the index into changes in technical efficiency, changes in technology, and changes in scale efficiency. We find that productivity decreased from 1985 to each of our first three target years but grew in the 1985-1989 comparison, and that 18.5% of our plants, and 27% of net generation lie in the decreasing returns region of the production set.