• Environmental and Resource Economics Review
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• v.24 no.4
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• pp.727-745
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• 2015

This paper analyzes the firms' optimization behavior in response to rising demand for non-priced renewable energy in the manufacturing industries by using an input distance function. The annual estimates of the shadow price of renewable energy is derived and the trend of its shadow price over time is analyzed. The degree of substitution of renewable energy for fossil-fuels is examined. The input-based Malmquist productivity index, defined as a composite of the technical efficiency and technical change measures, is measured. The contribution of renewable energy input growth to the Malmquist index is analyzed. Empirical results indicate that the shadow price of renewable energy declined at an average annual rate of 17% over the period 1992-2012. Substitutability between renewable energy and fossil-fuels was limited. On average, a 1% increase in renewable energy would decrease Malmquist index by 0.04% per year.

• Environmental and Resource Economics Review
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• v.22 no.1
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• pp.77-98
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• 2013

China, the world's largest $CO_2$ producer, is likely to be obligated to reduce greenhouse gas emissions under the post-Kyoto protocol. This paper estimates a Shephard input distance function for the Chinese fossil-fueled power generation sector to measure the shadow price of $CO_2$ emissions, technical efficiency, and indirect Morishima elasticities of substitution between inputs. Empirical results show that, on average, it costs approximately 3.2 US dollars per year to reduce $CO_2$ emissions by one ton over the period 1981-2009. This finding indicates that Chinese power sector is expected to benefit from selling emission permits to other countries such as Korea and Japan, given that our estimate for China is lower than the ones previous literatures estimated for the power sector in these countries. The maximum attainable average $CO_2$ reduction potential amounts to approximately 25 million tons per year by improving technical efficiency. Capital is substitutable with both coal and oil and capital is relatively more readily substituted for these fuels.

• Environmental and Resource Economics Review
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• v.22 no.3
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• pp.459-479
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• 2013

To assess the feasibility of 'low carbon, sustainable growth' policy pursued of the Chinese government, this paper first measures technical efficiency, $CO_2$ shadow prices, and indirect Morishima elasticity of substitution between capital and energy for 24 of manufacturing sectors in Beijing and Chongqing, in which China launched pilot carbon emissions trading scheme, by estimating the input distance function. Based on these results, then the potential for $CO_2$ reduction, cost savings from emissions trading, and the effectiveness of capital investment in reducing $CO_2$ are compared across industries and provinces. In 2010, manufacturing industries in Beijing and Chongqing could potentially reduce the largest $CO_2$ emissions, amounting 5.2 and 17 million tons, respectively, by achieving 100% technical efficiency. While, on average, Chongqing has a comparative advantage in the cost savings from carbon trading over Beijing, Beijing is more likely to reduce $CO_2$ by expanding capital investment.

• Journal of Korean Society of Transportation
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• v.24 no.5 s.91
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• pp.45-56
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• 2006

In order to construct an information pool on the production characteristics and efficiency of Korean railroad industry, various alternative approaches have to be applied. In this paper we present an empirical application of the distance function to measure the technical efficiency and the production characteristics of Korean railroad industry, The distance function firstly introduced by Shephard (1953) provides the advantage that it does not need information about prices, so it can accommodate the multiple output nature of the railway only using the quantifies as data. This is of great relevance in the context of the public sector such as railroad industry where there are often distinct control mechanisms on input prices. Also the distance function allows us to obtain a measure of technical efficiency as well as a measure of production characteristics. From annual data on Korean railroad industry during 1964-2004, multiple output distance function is estimated using quadratic programming model. The resulting technical efficiency estimates has tended to be improved over the period $1980{\sim}2004$. The indirect Morishima elasticities of substitution indicate that the substitutabilities for labor are relatively very low or impossible. The average scale elasticity is 2.7 which means that increasing the scale by 1per cent will result in an output increase by 2.7 percent. This result indicates that economies of scale are present in the Korean railroad industry.