Management Practices and Climate Policy in China

Soo Keong Young, Ulrich Wagner, Peiyao Shen, Laure de Preux, Mirabelle Muȗls, Ralf Martin and Jing Cao

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We investigate how management quality moderates the impact of carbon pricing on Chinese firms. Based on interviews with managers and lead engineers at manufacturing firms in Hubei and Beijing, we construct a novel index on climate-change related management practices and link it to firm data from various sources. We document higher average productivity and more green innovation among firms that are well managed according to this index. In an event study of the introduction of regional cap-and-trade schemes for CO2, we analyze how these management practices interact with treatment. While treated firms reduced coal consumption more than control firms, this effect is statistically significant only for well-managed firms. The reduction could have been 25% greater if badly managed firms had been well managed. Our study highlights that good management practices, in particular energy monitoring, enhance the effectiveness of market-based climate policies by enabling firm to rationally comply with them.

Keywords: climate policy; firm behavior; management practices; emissions trading scheme; policy evaluation (search for similar items in EconPapers)
JEL-codes: D22 O31 Q48 Q54 (search for similar items in EconPapers)
Pages: 70
Date: 2023-09
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env, nep-hrm and nep-sbm
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Journal Article: Management Practices and Climate Policy in China (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_466

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