This study estimated the shadow price of two air pollutants (sulfur dioxide and nitrogen oxides) and carbon dioxide in 867 chemical firms from 2007 to 2012 using a parameterized directional distance function to measure the marginal abatement cost of pollutants. The result is as follows. 1) The average shadow prices of SO2, NOx and CO2 in the sample chemical firms were 59.8 yuan/kg equivalent, 388.13 yuan/kg equivalent and 164 yuan/ton equivalent, respectively. 2) The shadow prices of the three pollutants showed an upward and fragmented trend, implying that traditional target-bound emission reductions policies during the 11th Five-Year-Plan had not been economically effective. 3) By plotting the marginal abatement cost curve (MACC) of chemical industry, we find that in order to achieve the pollution reduction targets set by the 13th Five-Year Plan, the effective environmental tax rate should be much higher than the current environmental tax rate or the average carbon price in the carbon market, which means that the current environmental tax may require some adjustment. The shadow price of nitrogen oxides is much higher than that of sulfur dioxide, therefore the tax rate of nitrogen oxides may need a certain degree of adjustment. The results can provide some reference for the future establishment of a more complete system of environmental tax. © 2021 Peking University.
