Shadow pricing of undesirable outputs in nonparametric analysis
We contribute to a methodological debate in the nonparametric literature. Way of modeling undesirables as inputs or outputs, or by transformation functions. We point out a current error in the modeling of weak disposability under VRS. We introduce a new hybrid model with an economically meaningful interpretation. We introduce a Law of One Price rule for shadow prices of undesirable outputs.
shadow prices undesirable outputs weak disposability data envelopment analysis