Estimation of the shadow prices of pollutants with production/environment inefficiency taken into account: a nonparametric directional distance function approach

Authors
Lee, JDPark, JBKim, TY
Issue Date
2002-04
Publisher
ACADEMIC PRESS LTD- ELSEVIER SCIENCE LTD
Citation
JOURNAL OF ENVIRONMENTAL MANAGEMENT, v.64, no.4, pp.365 - 375
Abstract
This paper deals with the estimation of the shadow prices of pollutants with a nonparametric directional distance function approach, where the inefficiency involved in the production process is taken into account unlike the previous studies. The directional vector, which is critical to the estimation and subject to the criterion for an appropriate efficiency rule proposed here, is calculated by using the annual plans of power plants in terms of production and environment. In the empirical study for Korea's electric power industry during the period of 1990 1995, we find that the average shadow prices of sulfur oxides (SOx), nitrogen oxides (NOx), and total suspended particulates (TSP) are approximately 10% lower than those calculated under the assumption of full efficiency. The methodology we propose and the findings obtained in the empirical study allow us to undertake better decision-making over a broad range of environmental policy issues. (C) 2002 Published by Elsevier Science Ltd.
Keywords
MULTILATERAL PRODUCTIVITY COMPARISONS; UNDESIRABLE OUTPUTS; MULTILATERAL PRODUCTIVITY COMPARISONS; UNDESIRABLE OUTPUTS; shadow price; inefficiency; directional distance function; efficiency rule
ISSN
0301-4797
URI
https://pubs.kist.re.kr/handle/201004/139669
DOI
10.1006/jema.2001.0480
Appears in Collections:
KIST Article > 2002
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