Enforcement of Pollution Regulation in China

by Lin, Liguo

The thesis studies how firms comply with pollution taxation regulation in China and how Chinas environmental agencies impose effective environmental regulation on firms. Our study provides clear evidence that firms significantly underreport their pollution and enforcement actions by environmental agencies are mainly effective in verifying firms reported pollution and inducing firms to report their pollution more accurately. Moreover, we show that environmental agencies take into account firms' age and ownership when they impose plants' pollution standards and undertake inspections. We also show that plants who are located in higher GDP per capita areas and whose emissions are more likely to induce pollution damages are facing stricter effective environmental regulation, which is stricter pollution standards and more frequent inspections.