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Environmental regulatory stringency and the market for abatement goods and services in China

Jing Lan (), Alistair Munro () and Zhen Liu

Resource and Energy Economics, 2017, vol. 50, issue C, 105-123

Abstract: We provide an examination of the linkage between environmental regulation stringency and the demand for and supply of abatement goods and services. To that end we construct a five-equation simultaneous model that links environmental regulation stringency to abatement output through various underlying simultaneous mechanisms. This system is then estimated using a panel of 679 eco-firms in 78 industrial Chinese cities during the implementation period of collection and use of pollution discharge fees (promulgated by the Chinese State Council) from 2003 to 2007. We find that higher fees are generally associated with higher abatement supply but for some industries – notably wastewater treatment – there is evidence of ‘output restriction’, meaning that higher charges lead to a reduction in supply for established firms.

Keywords: Environmental regulation stringency; Abatement market; China; Eco-firms (search for similar items in EconPapers)
JEL-codes: J24 L60 Q56 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Environmental regulatory stringency and the market for abatement goods and services in China (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:50:y:2017:i:c:p:105-123

DOI: 10.1016/j.reseneeco.2017.07.003

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