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Marginal Abatement Costs of Carbon Dioxide Emissions in China: A Parametric Analysis

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  • Limin Du
  • Aoife Hanley
  • Chu Wei

Abstract

This paper investigates the technical inefficiency, shadow price and substitution elasticity of $$\hbox {CO}_{2}$$ CO 2 emissions of China based on a provincial panel for 2001–2010. Using linear programming to calculate a quadratic parameterized directional output distance function, we show that China’s technical inefficiency increases over the period implying further scope for $$\hbox {CO}_{2}$$ CO 2 emissions reduction in the medium and longer term at best by 4.5 and 4.9 % respectively. Our results (notwithstanding regional differences) highlight increases in the shadow price of $$\hbox {CO}_{2}$$ CO 2 abatement (1,000 Yuan/ton in 2001 to 2,100 Yuan/ton in 2010). Additionally, increasingly steep substitution elasticity highlights the difficult reality of reducing China’s $$\hbox {CO}_{2}$$ CO 2 emissions. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Limin Du & Aoife Hanley & Chu Wei, 2015. "Marginal Abatement Costs of Carbon Dioxide Emissions in China: A Parametric Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(2), pages 191-216, June.
    • Handle: RePEc:kap:enreec:v:61:y:2015:i:2:p:191-216
    DOI: 10.1007/s10640-014-9789-5
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