articleThe Quarterly Journal of EconomicsJun 16, 2020Closed access

Watering Down Environmental Regulation in China*

GHGuojun HeSWShaoda WangBZBing Zhang

Hong Kong University of Science and Technology · University of Chicago · +1 more institution

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Abstract

Abstract This article estimates the effect of environmental regulation on firm productivity using a spatial regression discontinuity design implicit in China's water quality monitoring system. Because water quality readings are important for political evaluations and the monitoring stations only capture emissions from their upstream regions, local government officials are incentivized to enforce tighter environmental standards on firms immediately upstream of a monitoring station, rather than those immediately downstream. Exploiting this discontinuity in regulation stringency with novel firm-level geocoded emission and production data sets, we find that immediate upstream polluters face a more than 24%…

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Topics & keywords

Topics
Keywords
  • Total factor productivity
  • Upstream (networking)
  • Regression discontinuity design
  • Downstream (manufacturing)
  • Discontinuity (linguistics)
  • Productivity
  • China
  • Promotion (chess)
UN Sustainable Development Goals
  • Clean water and sanitation
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