Can Technology Solve the Principal-Agent Problem? Evidence from China's War on Air Pollution

Michael Greenstone, Guojun He, Ruixue Jia and Tong Liu

American Economic Review: Insights, 2022, vol. 4, issue 1, 54-70

Abstract: We examine the introduction of automatic air pollution monitoring to counter suspected tampering at the local level, a central feature of China's "war on pollution." Exploiting 654 regression discontinuity designs based on city-level variation in the day that monitoring was automated, we find an immediate and lasting increase of 35 percent in reported PM10 concentrations post-automation. Moreover, automation's introduction increased online searches for face masks and air filters, which are strong predictors of purchases. Overall, our findings suggest that the biased and imperfect information prior to automation led to suboptimal investments in defensive measures, plausibly imposing meaningful welfare costs.

JEL-codes: D82 O13 P28 Q53 Q55 Q58 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aeri.20200373 (application/pdf)
https://doi.org/10.3886/E125321V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aeri.20200373.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aeri.20200373.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Can Technology Solve the Principal-Agent Problem? Evidence from ChinaÂ’s War on Air Pollution (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aerins:v:4:y:2022:i:1:p:54-70

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aeri.20200373

Access Statistics for this article

American Economic Review: Insights is currently edited by Amy Finkelstein

More articles in American Economic Review: Insights from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().