Abstract
This paper investigates the technical inefficiency, shadow price and substitution elasticity of \(\hbox {CO}_{2}\) emissions of China based on a provincial panel for 2001–2010. Using linear programming to calculate a quadratic parameterized directional output distance function, we show that China’s technical inefficiency increases over the period implying further scope for \(\hbox {CO}_{2}\) emissions reduction in the medium and longer term at best by 4.5 and 4.9 % respectively. Our results (notwithstanding regional differences) highlight increases in the shadow price of \(\hbox {CO}_{2}\) abatement (1,000 Yuan/ton in 2001 to 2,100 Yuan/ton in 2010). Additionally, increasingly steep substitution elasticity highlights the difficult reality of reducing China’s \(\hbox {CO}_{2}\) emissions.
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