Measuring the Shadow Price of Pollutants in the Iranian Electric Industry

Regarding environmental importance and the lack of analytical methods for environmental policies, in this paper, shadow price for NOx and SOx emissions has been estimated for the Iranian electric industry. Input distance function is used for estimating shadow prices. The estimated shadow prices have revealed that the cost of Iranian electric industry for reducing one KG of NOx and Sox is 14991 and 17687 Rials, respectively. Estimated shadow prices in this study are greater than the amount offered by EPO (Environment Protection Organization) and World Bank. So it is recommended that any fine should be taken according to the emission shadow price.