TY - JOUR
T1 - Directional shadow price estimation of CO2, SO2 and NOx in the United States coal power industry 1990-2010
AU - Lee, Chia Yen
AU - Zhou, Peng
N1 - Funding Information:
We are grateful to the financial support provided by the Ministry of Science and Technology of Taiwan ( MOST103-2221-E-006-122-MY3 ), the National Natural Science Foundation of China (nos. 71273005 and 71573119 ) and the Jiangsu Natural Science Foundation for Distinguished Young Scholars (no. BK20140038 ).
Publisher Copyright:
© 2015 Elsevier B.V.
PY - 2015/9/1
Y1 - 2015/9/1
N2 - Shadow prices, also termed marginal abatement costs, provide valuable guidelines to support environmental regulatory policies for CO2, SO2 and NOx, the key contributors to climate change. This paper complements the existing models and describes a directional marginal productivity (DMP) approach to estimate directional shadow prices (DSPs) which present substitutability among three emissions and are jointly estimated. We apply the method to a case study of CO2, SO2 and NOx produced by coal power plants operating between 1990 and 2010 in the United States. We find that DSP shows 1.1 times the maximal shadow prices estimated in the current literature. We conclude that estimating the shadow prices of each by-product separately may lead to an overestimation of the marginal productivity and an underestimation of the shadow prices.
AB - Shadow prices, also termed marginal abatement costs, provide valuable guidelines to support environmental regulatory policies for CO2, SO2 and NOx, the key contributors to climate change. This paper complements the existing models and describes a directional marginal productivity (DMP) approach to estimate directional shadow prices (DSPs) which present substitutability among three emissions and are jointly estimated. We apply the method to a case study of CO2, SO2 and NOx produced by coal power plants operating between 1990 and 2010 in the United States. We find that DSP shows 1.1 times the maximal shadow prices estimated in the current literature. We conclude that estimating the shadow prices of each by-product separately may lead to an overestimation of the marginal productivity and an underestimation of the shadow prices.
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U2 - 10.1016/j.eneco.2015.08.010
DO - 10.1016/j.eneco.2015.08.010
M3 - Article
AN - SCOPUS:84941101531
VL - 51
SP - 493
EP - 502
JO - Energy Economics
JF - Energy Economics
SN - 0140-9883
ER -
