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China's provincial industrial pollution: the role of technical efficiency, pollution levy and pollution quantity control

Published online by Cambridge University Press:  19 November 2013

Yanhong Jin  and
Liguo Lin
Yanhong Jin
Affiliation:
Department of Agricultural, Food and Resource Economics, Rutgers University, New Brunswick, NJ 08850, USA. Tel: 848-932-9139. E-mail: yjin@aesop.rutgers.edu
Liguo Lin
Affiliation:
School of Economics and Institute for Advanced Research, Key Laboratory of Mathematical Economics (SUFE) of Ministry of Education, University of Finance and Economics, Shanghai, China. E-mail: Lin.liguo@mail.shufe.edu.cn
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Abstract

Using China's provincial economic and pollution data from 1992 to 2008, we employ data envelope analysis and econometric analyses to explicitly estimate technical efficiency and examine the role of technical efficiency, pollution control instruments (pollution levy and pollution quantity control) and prices of production inputs on pollution intensity. We find that an increase of labor wage and a decrease of capital cost are associated with an improvement in technical efficiency. The levy rates of air pollution improve technical efficiency but pollution quantity control targets have no statistically significant effect on technical efficiency. On the other hand, technical efficiency, the effective levy rates, pollution quantity control targets and capital cost have a negative effect but wage has a positive effect on pollution intensity. The importance of production input prices in pollution intensity and technical efficiency suggests alternative channels for industrial pollution control as well as cautions for the unintended consequence on the environment if any policy changes are made relating to labor and capital costs.

Type
Research Article
Information
Environment and Development Economics , Volume 19 , Special Issue 1: China's Environmental Policy , February 2014 , pp. 111 - 132
Copyright
Copyright © Cambridge University Press 2013 

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