The shadow price of substitutable sulfur in the US electric power plant: A distance function approach
Given restrictions on sulfur dioxide emissions, a feasible long-run response could involve either an investment in improving boiler fuel-efficiency or a shift to a production process that is effective in removing sulfur dioxide. To allow for the possibility of substitution between sulfur and product...
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Published in | Journal of environmental management Vol. 77; no. 2; pp. 104 - 110 |
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Main Author | |
Format | Journal Article |
Language | English |
Published |
Oxford
Elsevier Ltd
01.10.2005
Elsevier Academic Press Ltd |
Subjects | |
Online Access | Get full text |
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Summary: | Given restrictions on sulfur dioxide emissions, a feasible long-run response could involve either an investment in improving boiler fuel-efficiency or a shift to a production process that is effective in removing sulfur dioxide. To allow for the possibility of substitution between sulfur and productive capital, we measure the shadow price of sulfur dioxide as the opportunity cost of lowering sulfur emissions in terms of forgone capital. The input distance function is estimated with data from 51 coal-fired US power units operating between 1977 and 1986. The indirect Morishima elasticities of substitution indicate that the substitutability of capital for sulfur is relatively high. The overall weighted average estimate of the shadow price of sulfur is −0.076 dollars per pound in constant 1976 dollars. |
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Bibliography: | ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23 ObjectType-Article-2 ObjectType-Feature-1 |
ISSN: | 0301-4797 1095-8630 |
DOI: | 10.1016/j.jenvman.2005.02.013 |