Measurement of China's Regional Economic Efficiency and Environmental Efficiency: A DEA-NBG Approach

The exiting DEA methods generally consider energy consumption as input indicator. It is reasonable from the perspective of economy or energy conservation. But from the perspective of environment or clean energy utilization, a region using more energy to generate lower pollutants is considered to be more efficient. Thus, energy consumption should be regarded as output indicator. If we consider the two perspectives at the same time, it will be difficult to judge energy consumption as input indicator or output indicator. To solve this problem, we incorporate Nash bargaining game (NBG) into DEA model to estimate the economic efficiency, environmental efficiency and united efficiency for China's 30 provinces during 2000-2011. It is found that the economic efficiency, environmental efficiency and united efficiency during 2000-2011 in China present distinct stage characteristics. The results obtained by employing the Mann and Whitney rank sum test imply that three efficiency measures among east area, central area and west area of China have significant heterogeneity, and the differences of provinces on the three performance measures are significant. On the basis of clear understanding about performance difference among provinces of China, it will contribute to realizing the win-win strategy as regard to the economy and environment on the whole by carrying out targeted economic and environmental policies for different regions.