IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v133y2024ics0140988324001889.html

Environmental taxes, environmental outsourcing, and pollution abatement: Evidence from Chinese industrial sewage discharge enterprises

Author

Listed:
  • Wang, Qianqian
  • Sun, Xinmeng
  • Xiong, Haoyang
  • Wang, Qi
  • Zhang, Bing

Abstract

Polluting enterprises purchase technologies, goods, or services from external enterprises to mitigate pollution, which is called environmental outsourcing. This paper examines the effect of environmental taxes (ETs) on pollution abatement when environmental outsourcing is prevalent. We build a novel enterprise-level panel dataset for 2011–2018 and employ staggered difference-in-differences (DID) estimators to investigate the heterogeneous responses of in-house and outsourced abatement enterprises to the environmental tax increments. Our research demonstrates that imposing environmental taxes for pollution control has a significant positive effect. However, the environmental taxes have failed to successfully transmit their impacts on the changes in compliance costs of polluting enterprises through pollution treatment fees in the end-of-pipe treatment process. It has been demonstrated that environmental outsourcing seriously dilutes and even hinders the efficacy of environmental taxes in reducing water pollution. These findings shed fresh insight on the relationship between environmental policies and outsourcing services and highlight the necessity of incorporating environmental outsourcing into the design of environmental policies.

Suggested Citation

  • Wang, Qianqian & Sun, Xinmeng & Xiong, Haoyang & Wang, Qi & Zhang, Bing, 2024. "Environmental taxes, environmental outsourcing, and pollution abatement: Evidence from Chinese industrial sewage discharge enterprises," Energy Economics, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:eneeco:v:133:y:2024:i:c:s0140988324001889
    DOI: 10.1016/j.eneco.2024.107480
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988324001889
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2024.107480?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    2. Damian Clarke & Kathya Tapia-Schythe, 2021. "Implementing the panel event study," Stata Journal, StataCorp LLC, vol. 21(4), pages 853-884, December.
    3. Manasi Deshpande & Yue Li, 2019. "Who Is Screened Out? Application Costs and the Targeting of Disability Programs," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 213-248, November.
    4. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
    5. Chang, Juin-Jen & Huang, Chien-Yu & Wong, Chun Yee & Yang, Yibai, 2023. "Environmental regulation stringency and allocation between R&D and physical capital: A two-engine growth model," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 733-753.
    6. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    7. Kim, Seung-Leul & Lee, Sang-Ho, 2016. "The licensing of eco-technology under emission taxation: Fixed fee vs. auction," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 343-357.
    8. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2019. "The Effect of Minimum Wages on Low-Wage Jobs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1405-1454.
    9. Jin, Youliang & Wang, Shujuan & Cheng, Xu & Zeng, Huixiang, 2024. "Can environmental tax reform curb corporate environmental violations? A quasi-natural experiment based on China's “environmental fees to taxes”," Journal of Business Research, Elsevier, vol. 171(C).
    10. Lin, Boqiang & Li, Xuehui, 2011. "The effect of carbon tax on per capita CO2 emissions," Energy Policy, Elsevier, vol. 39(9), pages 5137-5146, September.
    11. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(3), pages 369-382, July.
    12. repec:adr:anecst:y:2011:i:103-104:p:02 is not listed on IDEAS
    13. Zhe Yang & Zhenwu Xiong & Wenhao Xue & Yuhong Zhou, 2022. "The Impact of Pollution Fee Reform on the Emission of Water Pollutants: Evidence from Manufacturing Enterprises in China," IJERPH, MDPI, vol. 19(17), pages 1-17, August.
    14. Meng Sun, 2017. "Do Firms in Polluting Industries Outsource Pollution Abatement Services More? Panel Data Evidence from U.S. Industries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 111-117, August.
    15. Sant’Anna, Pedro H.C. & Zhao, Jun, 2020. "Doubly robust difference-in-differences estimators," Journal of Econometrics, Elsevier, vol. 219(1), pages 101-122.
    16. Maia David & Bernard Sinclair-Desgagné, 2010. "Pollution Abatement Subsidies and the Eco-Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(2), pages 271-282, February.
    17. Damien Sans & Sonia Schwartz & Hubert Stahn, 2019. "On Outsourced Abatement Services: Market Power and Efficient Regulation," Annals of Economics and Statistics, GENES, issue 136, pages 55-78.
    18. Dong, Kangyin & Shahbaz, Muhammad & Zhao, Jun, 2022. "How do pollution fees affect environmental quality in China?," Energy Policy, Elsevier, vol. 160(C).
    19. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    20. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(3), pages 323-346, November.
    21. Baker, Andrew C. & Larcker, David F. & Wang, Charles C.Y., 2022. "How much should we trust staggered difference-in-differences estimates?," Journal of Financial Economics, Elsevier, vol. 144(2), pages 370-395.
    22. Sinclair-Desgagné, Bernard, 2008. "The Environmental Goods and Services Industry," International Review of Environmental and Resource Economics, now publishers, vol. 2(1), pages 69-99, June.
    23. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, issue 103-104, pages 9-24.
    24. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Lisha & Pan, Minjie & Qian, Xinlei & Lv, Kangjuan, 2025. "Do specialized courts matter? Environmental judiciary and corporate emissions in China," Energy Policy, Elsevier, vol. 199(C).
    2. Zheng, Zhuoji & Li, Xueqin & Han, Xianfeng & Shi, Daqian & Liu, Juan, 2025. "Better green financial instrument: Government green fund and corporate new energy technology innovation," Energy Economics, Elsevier, vol. 143(C).
    3. Liu, Duan & Peng, Liyun & Wang, Qiuhong & Wan, Hong & Yu, Nizhou, 2025. "Water resources tax and corporate R&D strategies: Policy effects on innovation investment and collaboration preference," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 2276-2298.
    4. Chen, Yunsen & Feng, Zizhen & Yu, Yao & Yuan, Wei, 2025. "The capital market consequences of the regulator-led minority shareholder: Evidence from China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(3).
    5. Jiang, Mei & Wang, Kedi & Zhao, Qiuyun & Li, Siqi & Xu, Guifu, 2025. "Small and medium-sized banks and pollution emissions from industrial enterprises," International Review of Economics & Finance, Elsevier, vol. 97(C).
    6. Jiang, Ping & Ma, Yunxiao, 2025. "How AI reduces pollutant emissions: The dual mechanisms of productivity enhancement and financing constraint alleviation," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    7. Shao, Yanmin & Li, Junlong, 2025. "When renewable energy technology products exports meet geopolitical risks: Can environmental policies sweeten the bitter pill of the trade?," Energy Economics, Elsevier, vol. 145(C).
    8. Gao, Jiaming & Zhang, Li, 2025. "A differentiated study of the impact of command and market-based environmental regulation on corporate R&D investments —take China's coal power industry chain as an example," Energy Policy, Elsevier, vol. 207(C).
    9. Xu, Mengmeng & Wang, Zihao, 2024. "Political spillover effects of environmental policy: Evidence from China," Energy Economics, Elsevier, vol. 140(C).
    10. Chenghao Ye & Hongjie Gao & Igor A. Mayburov, 2025. "Exploring the Triple Dividend Effect and Threshold Effect of Environmental Protection Tax: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 17(15), pages 1-29, August.
    11. Soto, Gonzalo H. & Balsalobre-Lorente, Daniel & Martinez-Cobas, Xavier, 2025. "Environmental legislative shaping or green competitive advantages? The role of FDI among environmental regulations," Energy Economics, Elsevier, vol. 145(C).
    12. Yang, Zhijiu & You, Fengyi & Qin, Yanfang & Wu, Ge, 2025. "Environmental taxes, political connections, and firm financialization: Evidence from China's environmental tax reform," Finance Research Letters, Elsevier, vol. 78(C).
    13. Ding, Mingfa & Han, Yikai & Shen, Mi & Suardi, Sandy, 2025. "Political turnover and related party transactions in Chinese state-owned enterprises," Global Finance Journal, Elsevier, vol. 68(C).
    14. Wang, Yuwei & Zou, Zaijin & Jiang, Yanjun, 2025. "Environmental tax reform and corporate disclosure strategy," Finance Research Letters, Elsevier, vol. 86(PG).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    2. Brehm, Johannes & Pestel, Nico & Schaffner, Sandra & Schmitz, Laura, 2025. "From Low Emission Zone to academic track: Environmental policy effects on educational achievement in elementary school," Journal of Environmental Economics and Management, Elsevier, vol. 132(C).
    3. Li, Pei & Liu, Kaihao & Lu, Yi & Peng, Lu, 2025. "Organizing regulatory structure and local air quality: Evidence from the environmental vertical management reform in China," Journal of Comparative Economics, Elsevier, vol. 53(1), pages 139-164.
    4. Chen, Jidong & Shi, Xinzheng & Zhang, Ming-ang & Zhang, Sihan, 2024. "Centralization of environmental administration and air pollution: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    5. Zhu, Junjie & Guo, Hongfeng, 2025. "Does the development of high-speed rail benefit carbon emissions reduction?," Transport Policy, Elsevier, vol. 172(C).
    6. Melnik, Walter & Smyth, Andrew, 2024. "R&D tax credits and innovation," Journal of Public Economics, Elsevier, vol. 236(C).
    7. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    8. Yu, Yantuan & Zhang, Ning, 2025. "Towards low-carbon development through integration of technology and finance: Quasi-experimental evidence from China," Research in International Business and Finance, Elsevier, vol. 80(C).
    9. Brehm, Johannes & Pestel, Nico & Schaffner, Sandra & Schmitz, Laura, 2022. "From low emission zone to academic track: Environmental policy effects on educational achievement in elementary school," Ruhr Economic Papers 980, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Heller, David, 2024. "Financial market integration and the effects of financing constraints on innovation," Research Policy, Elsevier, vol. 53(4).
    11. Gruhl, Henri & Volkhausen, Nicolas & Pestel, Nico & aus dem Moore, Nils, 2025. "Air pollution and the housing market: Evidence from Germany’s Low Emission Zones," Journal of Environmental Economics and Management, Elsevier, vol. 132(C).
    12. Carl Hase & Johannes Kasinger, 2024. "The Pass-through of Retail Crime," Papers 2407.07201, arXiv.org, revised Oct 2024.
    13. Baker, Andrew C. & Larcker, David F. & Wang, Charles C.Y., 2022. "How much should we trust staggered difference-in-differences estimates?," Journal of Financial Economics, Elsevier, vol. 144(2), pages 370-395.
    14. Yadav, Anil & McHale, John & Harold, Jason & O'Neill, Stephen, 2024. "Estimating effects of staggered intervention with count and binary outcomes: a simulation study," Research Technical Papers 4/RT/24, Central Bank of Ireland.
    15. Neri, Lorenzo, 2024. "Moving opportunities: The impact of mixed-income public housing regenerations on student achievement," Journal of Public Economics, Elsevier, vol. 230(C).
    16. Hampton, Matt & Totty, Evan, 2023. "Minimum wages, retirement timing, and labor supply," Journal of Public Economics, Elsevier, vol. 224(C).
    17. Anina Harter, 2025. "Legislative institutions and distributive politics: Evidence from Germany’s federal budget committee," Berlin School of Economics Discussion Papers 0075, Berlin School of Economics.
    18. Bas Scheer & Wiljan van den Berge & Maarten Goos & Alan Manning & Anna Salomons, 2022. "Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling," CPB Discussion Paper 435, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Chun Zhu, Susan, 2022. "From Local to Global: How Foreign Acquisitions Reshape Job Mobility," Working Paper Series 1453, Research Institute of Industrial Economics, revised 25 Nov 2025.
    20. Robinson, Sarah & Tazhitdinova, Alisa, 2025. "One hundred years of U.S. state taxation," Journal of Public Economics, Elsevier, vol. 241(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:133:y:2024:i:c:s0140988324001889. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.