Shadow prices of direct and overall carbon emissions in China¡¯s construction industry: a parametric directional distance function-based sensitive estimation

Ke Wang, Kein Yang, Yi-Ming Wei and Chi Zhang

No 120, CEEP-BIT Working Papers from Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology

Abstract: Construction industry, together with building materials industries supplying it, is one of China¡¯s largest emitters of CO2. Structural change in construction industry has been promoted to mitigate CO2. This paper estimates CO2 shadow price of construction industry and its supporting materials industries in China so as to help them to mitigate CO2 cost-effectively. A parametric directional distance function model, taking into account all possible directional vectors, is applied to address issues regarding arbitrary selection of direction that will affect estimation of shadow price. Results show that there is larger potential for CO2 reduction in supporting material industries than in construction industry itself and shadow price of overall CO2 is much lower than that of direct CO2. The existence of enlarging heterogeneity in shadow prices among different regions provides strong support for introducing a national carbon trading market, thereby helping construction industry and building materials industries to reduce their abatement costs.

Keywords: Abatement cost; Building material industry; Construction industry; Shadow price (search for similar items in EconPapers)
JEL-codes: Q40 Q54 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2018-09-08
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env and nep-tra
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Citations: View citations in EconPapers (8)

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