“…This paper relies on an output distance function that has been widely used in the economic literature (Färe et al, 1989(Färe et al, , 1993(Färe et al, , 2005(Färe et al, , 2010Kumar and Rao, 2002;Hu, 2006;Murty et al, 2002). It follows Dang and Mourougane (2014) who show that, using the Shephard duality (1970) between the output distance function and the revenue function, and the homogeneity property of the distance function, the shadow prices of undesirable output can be expressed as 2Where are respectively the shadow price of undesirable output and of desirable output, is the output-undesirable output elasticity at the frontier of efficiency, or the quantity of good output that must be forgone to reduce the quantity of one per cent of bad output, and the pollutant intensity ratio or the actual output mix, which is a function of the current technology and to some degree the structure of the economy.…”