Bridging climate change mitigation policies and shadow price of undesirable outputs: a systematic literature review on applications

PurposeThe study seeks to shed light on the estimates of the carbon shadow price in the literature relying on frontier techniques. The shadow price of undesirable outputs, such as greenhouse gas emissions, assists policymakers in determining the most cost-effective methods for reducing emissions.Design/methodology/approachThe study relies on the PSALSAR and PRISMA approaches for a systematic literature review. The Web of Science and Scopus databases were used for the references.FindingsBoth parametric and nonparametric methods have been employed in the literature to estimate the shadow prices of undesirable outputs. Also, results were discussed according to the methodological and application aspects, and broad conclusions on obtained results were provided, bridging climate change mitigation policies and the shadow price of undesirable outputs.Originality/valueThe present study applies an integrated method, PSALSAR, to conduct a systematic review of 53 studies published between 2014 and 2023 in which efficiency models were applied to estimate the shadow price of undesirable outputs, especially CO2. After presenting the most applicable parametric and nonparametric estimation models, a systematic summary of included articles was provided, highlighting the key features of publications.