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The determinants of pollution levels: Firm-level evidence from Chinese manufacturing

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  • Jiang, Liangliang
  • Lin, Chen
  • Lin, Ping

Abstract

Using a large, unique, firm-level dataset from the Chinese manufacturing sector, we study important factors that are related to emission intensity for three pollutants in China – sulfur dioxide, wastewater, and soot. Our main findings are as follows: (1) compared to state-owned enterprises (SOEs), both foreign-owned firms and domestic public-listed firms exhibit less intensive pollutant emissions; (2) firms in regions with less local protection have lower pollution intensity; (3) better property rights protection is negatively correlated with pollutant discharge over and beyond the national standards; and (4) larger firms, firms in industries that export more, and firms with more educated employees pollute less. These results suggest that China should not target foreign firms more harshly in its effort to reduce industrial pollution. Better institutions in the form of more effective law enforcement and lower entry barriers across regional markets are also means of curbing China’s pressing environmental problems during its current stage of economic development.

Suggested Citation

  • Jiang, Liangliang & Lin, Chen & Lin, Ping, 2014. "The determinants of pollution levels: Firm-level evidence from Chinese manufacturing," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 118-142.
  • Handle: RePEc:eee:jcecon:v:42:y:2014:i:1:p:118-142
    DOI: 10.1016/j.jce.2013.07.007
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    Cited by:

    1. Maoliang Bu & Marcus Wagner, 2016. "Racing to the bottom and racing to the top: The crucial role of firm characteristics in foreign direct investment choices," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(9), pages 1032-1057, December.
    2. Iris Claus & Les Oxley & Siqi Zheng & Cong Sun & Ye Qi & Matthew E. Kahn, 2014. "The Evolving Geography Of China'S Industrial Production: Implications For Pollution Dynamics And Urban Quality Of Life," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 709-724, September.
    3. Jiang, Xuemei & Guan, Dabo & Zhang, Jin & Zhu, Kunfu & Green, Christopher, 2015. "Firm ownership, China's export related emissions, and the responsibility issue," Energy Economics, Elsevier, vol. 51(C), pages 466-474.
    4. Chen, Zhao & Kahn, Matthew E. & Liu, Yu & Wang, Zhi, 2018. "The consequences of spatially differentiated water pollution regulation in China," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 468-485.
    5. Louis Kaplow, 2017. "Optimal Regulation with Exemptions," NBER Working Papers 23887, National Bureau of Economic Research, Inc.
    6. Ankai Xu, 2016. "Environmental regulations and competitiveness: evidence based on Chinese firm data," CIES Research Paper series 47-2016, Centre for International Environmental Studies, The Graduate Institute.
    7. Min Maung & Craig Wilson & Xiaobo Tang, 2016. "Political Connections and Industrial Pollution: Evidence Based on State Ownership and Environmental Levies in China," Journal of Business Ethics, Springer, vol. 138(4), pages 649-659, November.
    8. Chen, Anping & Groenewold, Nicolaas, 2015. "Emission reduction policy: A regional economic analysis for China," Economic Modelling, Elsevier, vol. 51(C), pages 136-152.
    9. Chao, Chi-Chur & Ee, Mong Shan & Laffargue, Jean-Pierre & Yu, Eden S.H., 2016. "Environmental migration and capital mobility," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 430-441.
    10. Pedro Naso & Yi Huang Author Name: Tim Swanson, 2017. "The Porter Hypothesis Goes to China: Spatial Development, Environmental Regulation and Productivity," CIES Research Paper series 53-2017, Centre for International Environmental Studies, The Graduate Institute.
    11. Nabin, Munirul H. & Nguyen, Xuan & Sgro, Pasquale M. & Chao, Chi-Chur, 2014. "Strategic quality competition, mixed oligopoly and privatization," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 142-150.
    12. Nabin, Munirul H. & Sgro, Pasquale M. & Nguyen, Xuan & Chao, Chi Chur, 2016. "State-owned enterprises, competition and product quality," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 200-209.
    13. Wu, Haoyi & Guo, Huanxiu & Zhang, Bing & Bu, Maoliang, 2017. "Westward movement of new polluting firms in China: Pollution reduction mandates and location choice," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 119-138.
    14. Jiang, Xuemei & Zhu, Kunfu & Green, Christopher, 2015. "China's energy saving potential from the perspective of energy efficiency advantages of foreign-invested enterprises," Energy Economics, Elsevier, vol. 49(C), pages 104-112.
    15. Pedro Naso Author name: Tim Swanson, 2017. "How Does Environmental Regulation Shape Economic Development? A Tax Competition Model of China," CIES Research Paper series 54-2017, Centre for International Environmental Studies, The Graduate Institute.

    More about this item

    Keywords

    Pollution; Local protection; Law enforcement; FDI;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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