The effects of increasing emission Fee rates on Chinese firms' emissions: Evidence from a quasi-experiment.

Over the last four decades, the Chinese government has predominantly employed emission fees as a regulatory strategy to mitigate pollution from firms. However, the effectiveness of escalating emission fee rates on the emission levels of Chinese firms has not been examined. This study utilizes data from more than 80,000 Chinese firms spanning 2004-2013, employing difference-in-differences models to assess the effects of rising emission fee rates on firm emissions. The findings indicate the following: (1) Increased emission fee rates substantially reduce sulfur dioxide and chemical oxygen demand emissions among Chinese firms; (2) These heightened fees encourage firms to implement both end-of-pipe treatment and source control for sulfur dioxide and end-of-pipe treatment for chemical oxygen demand; (3) The emission reduction effects vary according to firm ownership and size. This research offers empirical evidence on the efficacy of emission fee systems and provides valuable insights for developing market incentive-based environmental regulations in the future.

The effect of state capital injection on firms' pollution emissions: Evidence from China.

Existing research on state capital injection (SCI) has not yet explored its environmental effects. Using Chinese firm level data and the difference-in-difference estimator, we estimated the effect of SCI on firms' sulfur dioxide (SO2) emissions. The results show that the SCI reduced firms' SO2 emissions significantly but have no effect on SO2 emissions intensity. Moreover, robustness tests show that SCI also reduced the emissions of industrial exhaust and chemical oxygen demand but not their emissions intensity. Further analysis reveals that the abatement effects of SCI are at the expense of capacity utilization reduction and then the sacrifice of economic output, thus failing to achieve a win-win situation for both pollution abatement and economic benefits. Firms accepting SCI do not significantly increase their use of pollution treatment technologies, either source control technologies or end-of-pipe treatment technologies. The reason may be that after accepting SCI, firms are required to take on more environmental social responsibility and are under higher pressure of pollution abatement. However, their managers may be more inclined to respond to environmental regulation and pollution control through non-market-based approaches rather than through technological innovation. In addition, heterogeneity analysis shows the pollution abatement effect of SCI only exists in small or lower administrative hierarchy firms. This study has shed some lights on the reform of the environmental regulatory system and the environmental performance management of state-owned enterprises.