Environment and economic efficiency: an analysis of some polluting Italian industries

this research presents an extension of the directional distance function model to measure performances for firms which produce a large number of pollutants and operate in different industrial sectors. I use this methodology to estimate productivity indexes on a sample of Italian firms that were forced to declare their emissions to the European Pollution Release and Transfer Register in 2007. A proxy for the environmental regulation’s cost is derived and results show a significant impact in term of potential value added lost. Estimations also reveal differences in mean environmental performances among industries; furthermore, the effect of pollution control follows the same path.