• Environmental and Resource Economics Review
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• v.17 no.1
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• pp.121-146
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• 2008

The purpose of this paper IS to estimate efficiency and loss of productivity under environmental regulation, and analyze the environmental efficiency index empirically. Using the panel data for 20 member countries of OECD during 1985~1999, environmental efficiency index can be constructed by comparing the production processes under alternative assumptions of disposability, by using a hyperbolic measure of productive efficiency. As a result of estimation for the environmental efficiency index, EE of OECD countries gradually shows a downward trend. In terms of the treatment of pollutants, Japan, Germany and France are countries that have a considerable burden in getting rid of the pollutants. In case of EE, Korea displayed high environment efficiency, but in the latter half of the 1990's, the environmental efficiency of Korea became slightly worse. During the same period, Korea had a burden in dealing with NOx just like the other OECD countries.