Strategic Interactions in Environmental Regulation Enforcement: Evidence from Chinese Provinces

Mary-Françoise Renard () and Hang Xiong
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Mary-Françoise Renard: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique
Hang Xiong: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique

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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)
Date: 2012-02-21
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00672449
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