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Enforcement of Capacity-Differentiated Regulations in China: Evidence from Coal-Fired Power Plants

Author

Listed:
  • Qi Sun

    (School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433, China)

  • Tiao Li

    (School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433, China)

  • Fang Wu

    (School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433, China)

Abstract

This article investigates the effects of the capacity-differentiated regulations that are popular in China. These regulations usually involve measures that gradually shut down small plants while allowing them to continue to operate until shutdown. We use a panel data set from coal-fired power plants during the period from 2003 to 2010 and employ the input demand equations and the difference-in-differences method to quantify the effects of these regulations. Our findings, which are robust to a variety of specifications, indicate that regulations of this type reduce capital spending and fuel efficiencies in the vulnerable small plants that are subject to shutdown under this regulation. We find no effect on the operating expenses of these small plants.

Suggested Citation

  • Qi Sun & Tiao Li & Fang Wu, 2015. "Enforcement of Capacity-Differentiated Regulations in China: Evidence from Coal-Fired Power Plants," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 10(4), pages 604-628, December.
    • Handle: RePEc:fec:journl:v:10:y:2015:i:4:p:604-628
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-004-015-0028-4
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    Keywords

    environmental regulations in china; distortion effects; difference-in- differences; efficiency; electricity;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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