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Safety and environmental inputs investment effect analysis: Empirical study of selected coal mining firms in China

Junice Dzonzi-Undi and Shixiang Li

Resources Policy, 2016, vol. 47, issue C, 178-186

Abstract: This study uses 2007–2012 panel data of 51 out of 100 top Chinese coal mining firms to calculate total factor productivity (TFP) and technical efficiency (EF) using Malmquist index. The study further examines the effects of safety, cleaner production investment and technological progress (represented by research and development (R&D) input variable) on industry's efficiency using Stochastic Frontier Analysis method (SFA). Results show that: (1) during the sample period, the average TFP of coal industry was relatively steady while the EF deteriorated; (2) larger coal firms have higher TFP and EF than smaller ones; (3) Technological progress has positive significant affects on EF, while safety and cleaner production inputs and the intersection of both factors separately exerts negative impacts on EF. Conclusions and recommendations are then made that: (1) if the main focus of coal industry's policy and regulation is on embracing short-term improvements in EF and adopting market mechanisms, then safety and cleaner production investment will be left out (2) focus should be on encouraging long- term increases in safety and cleaner production investments, while providing coal firms with step by step guidance on this investment; in order to avoid negative effects abrupt increases my exert on industry's EF and enable production through realistic economic means. (3) Short term focus should be on leading larger coal firms to increase technological changes so as to improve EF in the short run. (4) Moderation of the largest firms operations should be considered in order to maximize EF through technological progress.

Keywords: Coal industry; Efficiency; Safety investment; Cleaner production investment; China (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:eee:jrpoli:v:47:y:2016:i:c:p:178-186