The impacts of environmental regulation on industrial activities: Evidence from a quasi-natural experiment in Chinese prefectures

Bin Chen, Yuk Shing CHENG*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    30 Citations (Scopus)

    Abstract

    We assess the effectiveness of China's Two Control Zones (TCZ) policy, an environmental policy that tightens the control of acid rain and the emission of sulfur dioxide (SO2) in targeted areas. To identify the effect of the policy on industrial activities, we use the difference-in-differences (DID) method to study industry-level activities in China's prefectures based on a unique firm-level data set covering the period from 1999-2009. We find that stricter environmental regulation led to a lower level of polluting industrial activities in TCZ prefectures, which was associated with more closures of polluting firms in targeted prefectures and more new polluting firms in non-targeted locations. In addition, our findings suggest that the TCZ policy had more pronounced effects in the coastal areas and became more effective after China changed its assessment criteria for the performance of local officials in the late 2000s.

    Original languageEnglish
    Article number571
    JournalSustainability
    Volume9
    Issue number4
    DOIs
    Publication statusPublished - 9 Apr 2017

    Scopus Subject Areas

    • Geography, Planning and Development
    • Renewable Energy, Sustainability and the Environment
    • Management, Monitoring, Policy and Law

    User-Defined Keywords

    • Acid rain
    • Air pollution
    • China
    • Environmental regulation

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