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Driving factors of CO2 emission inequality in China: The role of government expenditure

Wei Fan, Li Li, Feiran Wang and Ding Li

China Economic Review, 2020, vol. 64, issue C

Abstract: China has reached a consensus regarding the total control of carbon dioxide (CO2) emissions; however, regional emission inequalities still exist. The reduction of carbon emissions is a public good and indicates a strong positive externality, which is difficult to solve within the market. Such reductions are highly dependent on governmental contributions. Therefore, using the Theil index and the logarithmic mean Divisia index decomposition approach, this paper integrates government expenditure into an analysis framework, investigating the driving factors of emission inequality and the status and changes of China's CO2 emission inequality from 2007 to 2015, attributing emission inequality to disparities in governmental expenditures, energy consumption, and other socioeconomic factors. The empirical results show that imbalances in economic development, population distribution, and energy structure were prerequisites for a regional emission inequality, while disparities in government expenditure also played an important role. Among these factors, disparities in the expenditure structure were the main cause for emission inequality. The findings of this paper provide guidelines for the government to set carbon emission reduction quota and implement reasonable differentiated emission reduction policies.

Keywords: Emission inequality; Government expenditure; Driving factor; Decomposition analysis; Theil index (search for similar items in EconPapers)
JEL-codes: H50 H72 Q54 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:64:y:2020:i:c:s1043951x20301425

DOI: 10.1016/j.chieco.2020.101545

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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