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

Author

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  • Pengfei Sheng

    (School of Economics, Henan University, North Part of Jinming Street, Jinming District, Kaifeng 475004, China)

  • 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)

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.

Suggested Citation

  • Pengfei Sheng & Jun Yang & Joshua D. Shackman, 2015. "Energy’s Shadow Price and Energy Efficiency in China: A Non-Parametric Input Distance Function Analysis," Energies, MDPI, vol. 8(3), pages 1-15, March.
    • Handle: RePEc:gam:jeners:v:8:y:2015:i:3:p:1975-1989:d:46772
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    References listed on IDEAS

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    Cited by:

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    2. Peihao Lai & Minzhe Du & Bing Wang & Ziyue Chen, 2016. "Assessment and Decomposition of Total Factor Energy Efficiency: An Evidence Based on Energy Shadow Price in China," Sustainability, MDPI, vol. 8(5), pages 1-23, April.
    3. Tamaki, Tetsuya & Shin, Kong Joo & Nakamura, Hiroki & Fujii, Hidemichi & Managi, Shunsuke, 2018. "Shadow prices and production inefficiency of mineral resources," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 111-121.
    4. Piotr F. Borowski, 2020. "Zonal and Nodal Models of Energy Market in European Union," Energies, MDPI, vol. 13(16), pages 1-21, August.
    5. Vincenzo Dovì & Antonella Battaglini, 2015. "Energy Policy and Climate Change: A Multidisciplinary Approach to a Global Problem," Energies, MDPI, vol. 8(12), pages 1-8, November.

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