Shadow Prices of SO2 Abatements for Regions in China

We use the linear programming approach to examine the overall macroeconomic performance and compute shadow prices of SO2 emission abatements for thirty regions in China during the 1996-2002 period. Our major findings are as follows: On average, the east is the most efficient and the west is the most inefficient during these seven years. The average efficiency of those regions with serious acid rain is higher than the national average. Shadow prices in the west area are the highest, while shadow prices in the central area are the lowest. Shadow prices of the regions with serious acid rain are lower than the national average shadow price, implying that China should start with SO2 abatements from these regions.