Resource allocation models’ construction for the reduction of undesirable outputs based on DEA methods

Abstract

During the fast developing process of the Chinese economy, China consumes lots of energy and environmental pollution caused by energy consumption currently urgently needs solving. So, paying more attention to energy saving and emission reduction is very important. Therefore, to reasonably allocate resources and reduce emissions in China’s different regions has practical significance. So this paper firstly considers the model construction method for resource allocation considering undesirable outputs between different decision making units based on the DEA framework under the CRS and VRS assumption. We have proposed some resource allocation models as a multiple objective linear problem which considers the input reduction, desirable output reduction and undesirable output reduction. Then, to demonstrate the practical application of the resource allocation model, numerical examples are used to illustrate the approach. In addition, we explore the resource allocation problem of China’s regions in 2006–2010. The empirical results show that the resource allocation models dealing with undesirable outputs have effective configuration results, that is, the reduction proportion for desirable output is smaller than the reduction proportion for undesirable output. From the resource allocation results in China’s regions, we find that the eastern area has more emission reduction than the central and western areas corresponding to the same energy consumption reduction, and the energy and environmental policy should focus more on the central and western areas. All of these conclusions will give some policy recommendations on saving energy and reducing pollution emissions.