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Cost Structure of Korean Manufacturing Industry Related to Investment in Prevention of Environmental Pollution

민승기 1

1서경대학교

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ABSTRACT

This study analyzes cost structure of Korean manufacturing industry related to investment in prevention of environmental pollution(IPEP below) by applying translog variable cost function. Important findings are as follows. From sufficiency degree of IPEP of 0.0954, far less than optimal level of 1, we discover shortage of IPEP. Therefore, we should make a plan to enhance IPEP. Inspite of deficiency of IPEP, shadow price is smaller than market price due to q-value of 0.9093. Therefore firms have not favorable condition in IPEP. Next, firms suffer a loss from increase of variable cost and production inefficiency, while make a profit on output increase and economies of scale by IPEP. Accordingly it is desired that firms should take measures to meet the increase of variable cost and production inefficiency in IPEP. And shadow price of IPEP is -0.0430, which shows negative(-) value. This circumstances mean that firms are faced with inefficiency of IPEP for lack of IPEP. Consequently firms can not reduce variable cost by IPEP. For that reason, we should raise IPEP to optimal level for promotion of efficiency of IPEP. Then firms save variable cost by IPEP.

Citation status

* References for papers published after 2022 are currently being built.