Strategic Interactions in Environmental Regulation Enforcement: Evidence fromChinese Provinces

Mary-Françoise Renard () and Hang Xiong ()
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Mary-Françoise Renard: Centre d'Etudes et de Recherches sur le Développement International(CERDI)

No 201207, Working Papers from CERDI

Abstract: This paper studies whether Chinese provinces set strategically their environmental stringency when faced with interprovincial competition for mobile capital. Using Chinese provincial data and spatial panel econometric models, we find that Chinese provinces do engage in this kind of strategic interaction, particularly among those with similar industrial structure. Furthermore, we haven’t found evidence of asymmetric responsiveness suggested by the race to the bottom theory. Finally, the one-sided fiscal decentralization is likely to strengthen the strategic behavior. These empirical results call for a skeptical attitude towards China’s decentralization of environment policy implementation as well as its fiscal arrangements.

Keywords: China; Strategic interaction; Pollution; Spatial panel (search for similar items in EconPapers)
JEL-codes: C2 H7 Q5 R5 (search for similar items in EconPapers)
Pages: 31
Date: 2012
New Economics Papers: this item is included in nep-env, nep-res, nep-tra and nep-ure
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Citations: View citations in EconPapers (8)

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