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Environmental regulatory stringency and the market for abatement goods and services in China

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  • Jing Lan

    (College of Public Administration, Nanjing Agricultural University)

  • Alistair Munro

    (National Graduate Institute for Policy Studies)

Abstract

We provide an examination of the linkage between environmental regulation stringency and the demand for and supply of abatement goods and services. To that end we construct a five-equation simultaneous model that links environmental regulation stringency to abatement output through various underlying simultaneous mechanisms. This system is then estimated using a panel of 679 eco-firms in 78 industrial Chinese cities during the implementation period of collection and use of pollution discharge fees (promulgated by the Chinese State Council) from 2003 to 2007. We find that higher fees are generally associated with higher abatement supply but for some industries – notably wastewater treatment – there is evidence of ‘output restriction’, meaning that higher charges lead to a reduction in supply for established firms.

Suggested Citation

  • Jing Lan & Alistair Munro, 2014. "Environmental regulatory stringency and the market for abatement goods and services in China," GRIPS Discussion Papers 14-18, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:14-18
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • 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

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