Regulating Conglomerates in China: Evidence from an Energy Conservation Program

Qiaoyi Chen, Zhao Chen, Zhikuo Liu, Juan Carlos Suárez Serrato and Yi Xu ()

No 29066, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study a prominent energy regulation affecting large Chinese manufacturers that are part of broader conglomerates. Using detailed firm-level data and difference-in-differences research designs, we show that regulated firms cut output and shifted production to unregulated firms in the same conglomerate instead of improving their energy efficiency. Conglomerate spillovers account for 40% of the output loss of regulated firms and substantially reduce aggregate energy savings. Using a structural model, we show that alternative polices that use public information on business networks could lower the shadow cost of the regulation by more than 40% and increase aggregate energy savings by 10%.

JEL-codes: H23 L51 O44 Q48 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-cna, nep-ene, nep-isf and nep-reg
Note: DEV EEE IO PR
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Citations: View citations in EconPapers (23)

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