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Incomplete enforcement of pollution regulation : bargaining power of Chinese factories

  • Hua Wang
  • Mamingi, Nlandu
  • Laplante, Benoit
  • Dasgupta, Susmita

Only a small number of studies have empirically examined the determinants of the monitoring and enforcement performed by environmental regulators, and most of these have focused on industrial countries. In contrast, the authors empirically examine the determinants of enforcement in China. More precisely, they analyze the determinants of firms'relative bargaining power with local environmental authorities with respect to the enforcement of pollution charges. The authors show that private sector firms appear to have less bargaining power than state-owned enterprises. Contrary to earlier findings, they also show that firms facing adverse financial situations have more bargaining power than other firms and are more likely to pay smaller pollution charges than they should be paying. Finally, the authors show that the greater the social impact of a firm's emissions (as measured by complaints), the less bargaining power it has with local environmental authorities.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2756.

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Date of creation: 31 Jan 2002
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Handle: RePEc:wbk:wbrwps:2756
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  1. Hua Wang & Ming Chen, 1999. "How the Chinese system of charges and subsidies affects pollution control efforts by China's top industrial polluters," Policy Research Working Paper Series 2198, The World Bank.
  2. Hua Wang & Wheeler, David, 2000. "Endogenous enforcement and effectiveness of China's pollution levy system," Policy Research Working Paper Series 2336, The World Bank.
  3. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
  4. Pargal, Sheoli & Wheeler, David, 1996. "Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1314-27, December.
  5. Ricketts, Martin & Peacock, Alan, 1986. "Bargaining and the regulatory system," International Review of Law and Economics, Elsevier, vol. 6(1), pages 3-16, June.
  6. Dasgupta, Susmita & Laplante, Benoit & Mamingi, Nlandu & Wang, Hua, 2001. "Inspections, pollution prices, and environmental performance: evidence from China," Ecological Economics, Elsevier, vol. 36(3), pages 487-498, March.
  7. Devon Garvie & Andrew Keeler, 1993. "Incomplete Enforcement with Endogenous Regulatory Choice," Working Papers 873, Queen's University, Department of Economics.
  8. Amacher, Gregory S. & Malik, Arun S., 1998. "Instrument Choice When Regulators and Firms Bargain," Journal of Environmental Economics and Management, Elsevier, vol. 35(3), pages 225-241, May.
  9. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
  10. Amacher, Gregory S. & Malik, Arun S., 1996. "Bargaining in Environmental Regulation and the Ideal Regulator," Journal of Environmental Economics and Management, Elsevier, vol. 30(2), pages 233-253, March.
  11. Lahiri, Kajal & Schmidt, Peter, 1978. "On the Estimation of Triangular Structural Systems," Econometrica, Econometric Society, vol. 46(5), pages 1217-21, September.
  12. Dion, Catherine & Lanoie, Paul & Laplante, Benoit, 1998. "Monitoring of Pollution Regulation: Do Local Conditions Matter?," Journal of Regulatory Economics, Springer, vol. 13(1), pages 5-18, January.
  13. Mary E. Deily & Wayne B. Gray, 1989. "Enforcement of pollution regulations in a declining industry," Working Paper 8912, Federal Reserve Bank of Cleveland.
  14. Porter, Richard C., 1988. "Environmental negotiation: Its potential and its economic efficiency," Journal of Environmental Economics and Management, Elsevier, vol. 15(2), pages 129-142, June.
  15. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, June.
  16. Dasgupta, Susmita & Huq, Mainul & Wheeler, David, 1997. "Bending the rules : discretionary pollution control in China," Policy Research Working Paper Series 1761, The World Bank.
  17. Hua Wang & Wheeler, David, 1996. "Pricing industrial pollution in China : an econometric analysis of the levy system," Policy Research Working Paper Series 1644, The World Bank.
  18. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
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