Energy’s Shadow Price and Energy Efficiency in China: A Non-Parametric Input Distance Function Analysis

Pengfei Sheng (), Jun Yang and Joshua D. Shackman
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Jun Yang: School of Economics and Business Administration, Chongqing University, Shanzheng Street 174, Shapingba District, Chongqing 400044, China
Joshua D. Shackman: College of Business Administration, Trident University International, Cypress, CA 90630, USA

Energies, 2015, vol. 8, issue 3, 1-15

Abstract: This paper extends prior research on energy inefficiency in China by utilizing a unique shadow price framework allocation in 30 Chinese provinces. We estimate the shadow price for energy input using the framework of production, and use the ratio of the shadow price to the market price to describe energy utilization. Using Chinese provincial-level data from 1998 to 2011, the results of the analysis reveal that shadow prices in China have grown rapidly during the sample period, which signifies that China has improved its performance in energy utilization since 1998. However, there are eighteen provinces whose shadow prices are lower than market prices. This result suggests that energy utilization is at a low level in these provinces and can be improved by a reallocation of inputs.

Keywords: energy; shadow price; energy efficiency (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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