Strategic Interaction in Spending on Environmental Protection: Spatial Evidence from Chinese Cities

18 Pages Posted: 2 Oct 2012

See all articles by Huihui Deng

Huihui Deng

affiliation not provided to SSRN

Xinye Zheng

Renmin University of China - School of Economics

Nan Huang

Harvest Fund Management Co., Ltd.

Fanghua Li

affiliation not provided to SSRN

Date Written: September‐October 2012

Abstract

In China, the responsibility of protecting the environment lies largely with local governments. Within the framework of spatial econometrics, we investigate empirically the consequence of such an institutional setting. Using city‐level data for China, the present study finds that city governments behave strategically in making spending decisions regarding environmental protection. This paper finds that a city government appears to cut its own spending as a response to the rise in environmental protection spending by its neighbors. Hence, environmental protection tends to be underprovided. As a result, we suggest that centralizing the environmental protection responsibility to a higher level of government would be beneficial in terms of controlling pollution in China.

Keywords: environmental protection, spatial econometrics, strategic interaction

JEL Classification: C21, H70, Q50

Suggested Citation

Deng, Huihui and Zheng, Xinye and Huang, Nan and Li, Fanghua, Strategic Interaction in Spending on Environmental Protection: Spatial Evidence from Chinese Cities (September‐October 2012). China & World Economy, Vol. 20, Issue 5, pp. 103-120, 2012, Available at SSRN: https://ssrn.com/abstract=2155518 or http://dx.doi.org/10.1111/j.1749-124X.2012.01304.x

Huihui Deng (Contact Author)

affiliation not provided to SSRN

No Address Available

Xinye Zheng

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100872
China

Nan Huang

Harvest Fund Management Co., Ltd.

Beijing
China

Fanghua Li

affiliation not provided to SSRN

No Address Available

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
494
PlumX Metrics