IDEAS home Printed from https://ideas.repec.org/a/kap/jproda/v49y2018i2d10.1007_s11123-018-0528-8.html
   My bibliography  Save this article

An iterative approach to the estimation of the abatement costs of harmful emissions

Author

Listed:
  • Alexandre Repkine

    (Konkuk University)

  • Dongki Min

    (Konkuk University)

Abstract

The ability to quantify tradeoffs involved in the process of reducing harmful emissions is essential to successful policy-making in the environmental planning area. The approach by Färe et al. (J Econom 126: 469–492, 2005) to computing point estimates of the marginal abatement costs (MACs) of reducing pollution by estimating the directional output distance function has been gaining popularity in recent years. The contribution of this study is to compute MACs as slopes of the iterated parametric production possibilities frontier (PPF) estimated on the basis of the set of efficient projections of observable output combinations obtained from the parameters of directional output distance function. Policy makers are thus provided with the general shape of the production possibilities set for a polluting technology rather than with a set of point estimates of the MACs. We apply our methodology to a balanced panel of seven Korean manufacturing sectors spanning the period between 1999 and 2009, obtaining theoretically consistent concave PPFs based on a large set of directional output distance vectors. Finally, we estimate the parameters of a directional output distance function corresponding to the iterated PPF.

Suggested Citation

  • Alexandre Repkine & Dongki Min, 2018. "An iterative approach to the estimation of the abatement costs of harmful emissions," Journal of Productivity Analysis, Springer, vol. 49(2), pages 123-136, June.
    • Handle: RePEc:kap:jproda:v:49:y:2018:i:2:d:10.1007_s11123-018-0528-8
    DOI: 10.1007/s11123-018-0528-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11123-018-0528-8
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11123-018-0528-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Matsushita, Kyohei & Yamane, Fumihiro, 2012. "Pollution from the electric power sector in Japan and efficient pollution reduction," Energy Economics, Elsevier, vol. 34(4), pages 1124-1130.
    2. Coggins, Jay S. & Swinton, John R., 1996. "The Price of Pollution: A Dual Approach to Valuing SO2Allowances," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 58-72, January.
    3. Rolf Färe & Shawna Grosskopf & William L. Weber, 2001. "Shadow Prices of Missouri Public Conservation Land," Public Finance Review, , vol. 29(6), pages 444-460, November.
    4. R. Färe & S. Grosskopf & G. Whittaker, 2013. "Directional output distance functions: endogenous directions based on exogenous normalization constraints," Journal of Productivity Analysis, Springer, vol. 40(3), pages 267-269, December.
    5. Park, Hojeong & Lim, Jaekyu, 2009. "Valuation of marginal CO2 abatement options for electric power plants in Korea," Energy Policy, Elsevier, vol. 37(5), pages 1834-1841, May.
    6. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alexandre Repkine & Dongki Min, 2020. "Foreign-Funded Enterprises and Pollution Halo Hypothesis: A Spatial Econometric Analysis of Thirty Chinese Regions," Sustainability, MDPI, vol. 12(12), pages 1-24, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lee, Chia-Yen & Wang, Ke, 2019. "Nash marginal abatement cost estimation of air pollutant emissions using the stochastic semi-nonparametric frontier," European Journal of Operational Research, Elsevier, vol. 273(1), pages 390-400.
    2. Lee, Chia-Yen & Zhou, Peng, 2015. "Directional shadow price estimation of CO2, SO2 and NOx in the United States coal power industry 1990–2010," Energy Economics, Elsevier, vol. 51(C), pages 493-502.
    3. Dong-Hyun Oh & JongWuk Ahn & Sinwoo Lee & Hyundo Choi, 2021. "Measuring technical inefficiency and CO2 shadow price of Korean fossil-fuel generation companies using deterministic and stochastic approaches," Energy & Environment, , vol. 32(3), pages 403-423, May.
    4. Zhang, Ning & Jiang, Xue-Feng, 2019. "The effect of environmental policy on Chinese firm's green productivity and shadow price: A metafrontier input distance function approach," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 129-136.
    5. Ye Wang & Yunguo Lu & Lin Zhang, 2021. "Opportunity Cost of Environmental Regulation in China’s Industrial Sector," IJERPH, MDPI, vol. 18(16), pages 1-19, August.
    6. Ke Wang & Yujiao Xian & Chia-Yen Lee & Yi-Ming Wei & Zhimin Huang, 2019. "On selecting directions for directional distance functions in a non-parametric framework: a review," Annals of Operations Research, Springer, vol. 278(1), pages 43-76, July.
    7. Zhou, P. & Zhou, X. & Fan, L.W., 2014. "On estimating shadow prices of undesirable outputs with efficiency models: A literature review," Applied Energy, Elsevier, vol. 130(C), pages 799-806.
    8. Zhou, X. & Fan, L.W. & Zhou, P., 2015. "Marginal CO2 abatement costs: Findings from alternative shadow price estimates for Shanghai industrial sectors," Energy Policy, Elsevier, vol. 77(C), pages 109-117.
    9. Färe, Rolf & Pasurka, Carl & Vardanyan, Michael, 2017. "On endogenizing direction vectors in parametric directional distance function-based models," European Journal of Operational Research, Elsevier, vol. 262(1), pages 361-369.
    10. Yongrok Choi & Chao Qi, 2019. "Is South Korea’s Emission Trading Scheme Effective? An Analysis Based on the Marginal Abatement Cost of Coal-Fueled Power Plants," Sustainability, MDPI, vol. 11(9), pages 1-12, April.
    11. Du, Limin & Lu, Yunguo & Ma, Chunbo, 2022. "Carbon efficiency and abatement cost of China's coal-fired power plants," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    12. Tang, Kai & Yang, Lin & Zhang, Jianwu, 2016. "Estimating the regional total factor efficiency and pollutants’ marginal abatement costs in China: A parametric approach," Applied Energy, Elsevier, vol. 184(C), pages 230-240.
    13. Badau, Flavius & Färe, Rolf & Gopinath, Munisamy, 2016. "Global resilience to climate change: Examining global economic and environmental performance resulting from a global carbon dioxide market," Resource and Energy Economics, Elsevier, vol. 45(C), pages 46-64.
    14. Du, Limin & Hanley, Aoife & Wei, Chu, 2015. "Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis," Energy Economics, Elsevier, vol. 48(C), pages 217-229.
    15. Lee, Sang-choon & Oh, Dong-hyun & Lee, Jeong-dong, 2014. "A new approach to measuring shadow price: Reconciling engineering and economic perspectives," Energy Economics, Elsevier, vol. 46(C), pages 66-77.
    16. Wei, Chu & Löschel, Andreas & Liu, Bing, 2013. "An empirical analysis of the CO2 shadow price in Chinese thermal power enterprises," Energy Economics, Elsevier, vol. 40(C), pages 22-31.
    17. Bostian, Moriah B. & Herlihy, Alan T., 2014. "Valuing tradeoffs between agricultural production and wetland condition in the U.S. Mid-Atlantic region," Ecological Economics, Elsevier, vol. 105(C), pages 284-291.
    18. Rakesh Kumar Jain & Surender Kumar, 2018. "Shadow price of CO2 emissions in Indian thermal power sector," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 879-902, October.
    19. M. Murty & Surender Kumar & Kishore Dhavala, 2007. "Measuring environmental efficiency of industry: a case study of thermal power generation in India," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 31-50, September.
    20. Du, Limin & Mao, Jie, 2015. "Estimating the environmental efficiency and marginal CO2 abatement cost of coal-fired power plants in China," Energy Policy, Elsevier, vol. 85(C), pages 347-356.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:49:y:2018:i:2:d:10.1007_s11123-018-0528-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.