The calculation of shadow prices for industrial wastes using distance functions: An analysis for Spanish ceramic pavements firms

This paper deals with the calculation of shadow prices for two industrial wastes generated on their production processes by 18 firms belonging to the Spanish ceramic pavements industry. These prices are then used to calculate an extended productivity index which takes into consideration wastes going with the production of marketable goods. We follow the methodological approach first proposed by Färe et al. (The Review of Economics and Statistics 75 (1993)). A negative correlation is found between absolute shadow prices and wastes production intensity, reflecting a greater marginal cost of eliminating wastes for those firms using less contaminant production processes. Differences between a conventional labour productivity index and an extended productivity index are also statistically related to firms characteristics such as size, previous investments in cleaner technologies and affiliation to a Technological Institute.