Journal
EMERGING MARKETS FINANCE AND TRADE
Volume 55, Issue 12, Pages 2718-2737Publisher
ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
DOI: 10.1080/1540496X.2019.1587708
Keywords
Discount rate; energy price distortion; exhaustible energy resources; marginal opportunity cost
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Funding
- National Natural Science Foundation of China [71874073, 71834003, 71573186]
- Key Projects of Philosophy and Social Science Research in Universities of Jiangsu Province [2017ZDIXM046]
- Six talent peaks project in Jiangsu Province [JNHB-024]
- International Clean Energy Top Talents Program (iCET 2018) - China Scholarship Council (CSC)
- Outstanding young backbone teachers of Qinglan Project in Jiangsu Province
- Deep-Blue-Scholar program - Jiangsu University of Science and Technology
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This paper uses the marginal opportunity cost (MOC) pricing method to calculate theoretical prices of energy resources (namely coal, crude oil, and natural gas). The theoretical price encompasses the marginal production cost (MPC) for exploitation, marginal user cost (MUC) for the scarcity of the exhaustible resources, and the marginal external cost (MEC) for environmental impacts. Compared with the existing compensation mechanism, this study estimates the degree of energy price distortions under different discount rates. The results show that each resource price presents different degrees of distortion with varying causes for the distortions. The crude oil price had the highest distortion degree, followed by coal and natural gas, and the lower the discount rate, the more serious is the energy price distortion.
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