State Ownership and Cost-effectiveness of Environmental Policy: Firm-level Evidence
61 Pages Posted: 5 Oct 2021 Last revised: 16 Sep 2022
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State Ownership and Cost-effectiveness of Environmental Policy: Firm-level Evidence
State Ownership and Cost-Effectiveness of Environmental Policy: Firm-Level Evidence
Date Written: July 21, 2021
Abstract
We employ Chinese firm-level data to examine the interconnections among firm ownership,
environmental regulation, and non-environmental economic policies. We find that there are
substantial differences between state-owned enterprises (SOEs) and privately-owned enterprises
(POEs) in response to government anti-pollution mandates. SOEs reduced emissions more than
POEs, with the former relying mainly on abatement investment and the latter on reducing outputs.
An average POE’s marginal abatement cost is more than nine times that of an average SOE, suggesting significant inefficiencies in policy implementation. Policies liberalizing financial markets could affect POEs’ abatement costs and improve the cost-effectiveness of environmental policies.
Keywords: State-owned enterprises, Financial liberalization, Environmental regulation, Cost-effectiveness
JEL Classification: O13, Q53, Q58
Suggested Citation: Suggested Citation