The Evaluation of Climate Change Competitiveness via DEA Models and Shannon Entropy: EU Regions

Abstract

The purpose of this paper is to assess the efficiency of climate change competitiveness via a case study on EU regions by using the data envelopment analysis (DEA) model and Shannon entropy. First, on the same premise as similar composite indicators, we develop a DEA model to assess the relative performance of the regions in climate change competitiveness. Then, we extend our calculations with a DEA-like model and Shannon entropy to derive global estimates of a new competitiveness index by using common weights. Results show that the proposed DEA-Entropy model enables the construction of a regional climate change competitiveness index among all regions via a set of common weights. The proposed model’s common weight structure demonstrates more discriminative power compared to the weights obtained through pure DEA or DEA-like methods. In order to validate the proposed DEA-Entropy model, it was applied to 120 EU regions. The results are meaningful for the regions to improve their competitiveness.