[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v110y2015icp119-133.html
   My bibliography  Save this article

Relocation or reallocation: Impacts of differentiated energy saving regulation on manufacturing industries in China

Author

Listed:
  • Zhu, Junming
  • Ruth, Matthias
Abstract
Unilateral tightening of environmental regulation is often considered to cause regulated industries to locate at places with lower compliance cost. The pollution haven effect may be offset, however, when endogenous technical change and factor reallocation can compensate increased compliance cost. This paper identifies the overall effects on industrial activities from provincially differentiated regulation of energy saving in China. Econometric specifications take into account the workings of different policy instruments, quantity and revenue-based measurement of output, policy-induced price effects, and alternative measurement of productivity and competitiveness. Results indicate that an introduction of energy-saving policies leads to loss of output and productivity in energy-intensive industries initially, which is passed on to other industries via markets of capital and energy-intensive goods. Under higher regulation, energy-intensive industries become more capital-intensive, regain productivity more quickly, and increase export rates; other industries become more labor-intensive, recover more slowly, and decrease export rates. Through capital investment and factor reallocation, China's policy has been effective in improving industrial energy efficiency without causing competitive loss or carbon leakage. An incentive-based instrument of differential electricity prices leads to similar effects on industries, implying the possibility for more efficient policy-making.

Suggested Citation

  • Zhu, Junming & Ruth, Matthias, 2015. "Relocation or reallocation: Impacts of differentiated energy saving regulation on manufacturing industries in China," Ecological Economics, Elsevier, vol. 110(C), pages 119-133.
    • Handle: RePEc:eee:ecolec:v:110:y:2015:i:c:p:119-133
    DOI: 10.1016/j.ecolecon.2014.12.020
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800915000051
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2014.12.020?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lu, Jiangyong & Tao, Zhigang, 2009. "Trends and determinants of China's industrial agglomeration," Journal of Urban Economics, Elsevier, vol. 65(2), pages 167-180, March.
    2. Aichele, Rahel & Felbermayr, Gabriel, 2012. "Kyoto and the carbon footprint of nations," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 336-354.
    3. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
    4. John A. List & Daniel L. Millimet & Per G. Fredriksson & W. Warren McHone, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 944-952, November.
    5. W. Reed Walker, 2013. "The Transitional Costs of Sectoral Reallocation: Evidence From the Clean Air Act and the Workforce," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(4), pages 1787-1835.
    6. Jean-Marc Burniaux & Joaquim Oliveira Martins, 2016. "Carbon Leakages: A General Equilibrium View," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 341-363, Springer.
    7. Rahel Aichele & Gabriel Felbermayr, 2013. "Estimating the Effects of Kyoto on Bilateral Trade Flows Using Matching Econometrics," The World Economy, Wiley Blackwell, vol. 36(3), pages 303-330, March.
    8. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    9. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    10. Rema Hanna, 2010. "US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 158-189, July.
    11. Kahn, Matthew E., 1997. "Particulate pollution trends in the United States," Regional Science and Urban Economics, Elsevier, vol. 27(1), pages 87-107, February.
    12. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    13. W. Reed Walker, 2011. "Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act," American Economic Review, American Economic Association, vol. 101(3), pages 442-447, May.
    14. repec:dau:papers:123456789/7970 is not listed on IDEAS
    15. David Popp, 2010. "Innovation and Climate Policy," NBER Working Papers 15673, National Bureau of Economic Research, Inc.
    16. Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
    17. Michael Greenstone & John A. List & Chad Syverson, 2011. "The Effects of Environmental Regulation on the Competiveness of U.S. Manufacturing," Working Papers 11-03, Center for Economic Studies, U.S. Census Bureau.
    18. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
    19. Henderson, J Vernon, 1996. "Effects of Air Quality Regulation," American Economic Review, American Economic Association, vol. 86(4), pages 789-813, September.
    20. Bai, Chong-En & Du, Yingjuan & Tao, Zhigang & Tong, Sarah Y., 2004. "Local protectionism and regional specialization: evidence from China's industries," Journal of International Economics, Elsevier, vol. 63(2), pages 397-417, July.
    21. Kahn, Matthew E. & Mansur, Erin T., 2013. "Do local energy prices and regulation affect the geographic concentration of employment?," Journal of Public Economics, Elsevier, vol. 101(C), pages 105-114.
    22. David Popp, 2010. "Innovation and Climate Policy," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 275-298, October.
    23. Olivier Deschênes, 2011. "Climate Policy and Labor Markets," NBER Chapters, in: The Design and Implementation of US Climate Policy, pages 37-49, National Bureau of Economic Research, Inc.
    24. James Bushnell & Carla Peterman & Catherine Wolfram, 2008. "Local Solutions to Global Problems: Climate Change Policies and Regulatory Jurisdiction," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 175-193, Summer.
    25. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fu, Tong & Jian, Ze, 2020. "A developmental state: How to allocate electricity efficiently in a developing country," Energy Policy, Elsevier, vol. 138(C).
    2. Xia Jiang & Tingting Tan & Bing Yuan & Chaoqun Wang & Yanhong Zhang, 2024. "RETRACTED ARTICLE: How does the green development program promote rural economy: energy and environmental effects in rural development of China," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-37, April.
    3. Ma, Ben & Zheng, Xinye, 2018. "Biased data revisions: Unintended consequences of China's energy-saving mandates," China Economic Review, Elsevier, vol. 48(C), pages 102-113.
    4. Ma, Ben & Yu, Yihua & Urban, Frauke, 2018. "Green transition of energy systems in rural China: National survey evidence of households’ discrete choices on water heaters," Energy Policy, Elsevier, vol. 113(C), pages 559-570.
    5. Junming Zhu & Marian R. Chertow, 2019. "Authoritarian but responsive: Local regulation of industrial energy efficiency in Jiangsu, China," Regulation & Governance, John Wiley & Sons, vol. 13(3), pages 384-404, September.
    6. Chen, Jiandong & Cheng, Shulei & Song, Malin & Wu, Yinyin, 2016. "A carbon emissions reduction index: Integrating the volume and allocation of regional emissions," Applied Energy, Elsevier, vol. 184(C), pages 1154-1164.
    7. Lu & Pollitt, M. G. & Wang, K. & Wei, Y-M., 2023. "The Incremental Impact of China's Carbon," Cambridge Working Papers in Economics 2349, Faculty of Economics, University of Cambridge.
    8. Ling, Zaili & Huang, Tao & Li, Jixiang & Zhou, Sheng & Lian, Lulu & Wang, Jinxiang & Zhao, Yuan & Mao, Xiaoxuan & Gao, Hong & Ma, Jianmin, 2019. "Sulfur dioxide pollution and energy justice in Northwestern China embodied in West-East Energy Transmission of China," Applied Energy, Elsevier, vol. 238(C), pages 547-560.
    9. Minsheng Li & Lejie Li & Xun Li, 2022. "Restructuring Urban Outskirts Industrial Areas from the Industrial Clustering Perspective: A Case Study in Shunde, China," Land, MDPI, vol. 11(11), pages 1-16, November.
    10. Koji Kotani & Makoto Kakinaka, 2017. "Some implications of environmental regulation on social welfare under learning-by-doing of eco-products," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 121-149, January.
    11. Zhu, Junming & Niu, Limin & Ruth, Matthias & Shi, Lei, 2018. "Technological Change and Energy Efficiency in Large Chinese Firms," Ecological Economics, Elsevier, vol. 150(C), pages 241-250.
    12. Fu, Tong & He, Feng & Lucey, Brian, 2023. "Justice as efficiency: Courts and the allocation of electricity in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 84(C).
    13. Zhou, Qian & Zhong, Shihu & Shi, Tao & Zhang, Xiaoling, 2021. "Environmental regulation and haze pollution: Neighbor-companion or neighbor-beggar?," Energy Policy, Elsevier, vol. 151(C).
    14. Pan, Xian & Yu, Lihong, 2024. "Do China's pilot emissions trading schemes lead to domestic carbon leakage? Perspective from the firm relocation," Energy Economics, Elsevier, vol. 132(C).
    15. Fu, Tong & Chang, Dongfeng & Miao, Chenglin, 2022. "Fuel regulation in a developing country: An interventional perspective," Energy Economics, Elsevier, vol. 113(C).
    16. Hanxiao Wei & Huiqin Yao, 2022. "Environmental Regulation, Roundabout Production, and Industrial Structure Transformation and Upgrading: Evidence from China," Sustainability, MDPI, vol. 14(7), pages 1-17, March.
    17. Mei Lu & Michael G. Pollitt & Ke Wang & Yi-Ming Wei, 2023. "The incremental impact of China’s carbon trading pilots," Working Papers EPRG2316, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    18. Mao, Wenxin & Sun, Huifang & Wang, Wenping & Luo, Dang, 2024. "Factor reallocation path for low-carbon transformation: A perspective of manufacturing industry ecosystem," Energy Economics, Elsevier, vol. 134(C).
    19. Bo Zeng & Meng Zhou & Jun Zhang, 2017. "Forecasting the Energy Consumption of China’s Manufacturing Using a Homologous Grey Prediction Model," Sustainability, MDPI, vol. 9(11), pages 1-16, October.
    20. Zhu, Junming & Chertow, Marian R., 2017. "Business Strategy Under Institutional Constraints: Evidence From China's Energy Efficiency Regulations," Ecological Economics, Elsevier, vol. 135(C), pages 10-21.
    21. Zhaohui Chong & Chenglin Qin & Xinyue Ye, 2017. "Environmental Regulation and Industrial Structure Change in China: Integrating Spatial and Social Network Analysis," Sustainability, MDPI, vol. 9(8), pages 1-16, August.
    22. Xiaowen Wang & Shuting Wang & Yunsheng Zhang, 2022. "The Impact of Environmental Regulation and Carbon Emissions on Green Technology Innovation from the Perspective of Spatial Interaction: Empirical Evidence from Urban Agglomeration in China," Sustainability, MDPI, vol. 14(9), pages 1-19, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antoine Dechezleprêtre & Misato Sato, 2017. "The Impacts of Environmental Regulations on Competitiveness," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 183-206.
    2. E. Mark Curtis, 2014. "Who Loses Under Power Plant Cap-and-Trade Programs?," NBER Working Papers 20808, National Bureau of Economic Research, Inc.
    3. Joltreau, Eugénie & Sommerfeld, Katrin, 2016. "Why does emissions trading under the EU ETS not affect firms' competitiveness? Empirical findings from the literature," ZEW Discussion Papers 16-062, ZEW - Leibniz Centre for European Economic Research.
    4. Tanaka, Shinsuke, 2015. "Environmental regulations on air pollution in China and their impact on infant mortality," Journal of Health Economics, Elsevier, vol. 42(C), pages 90-103.
    5. Li, Shuo & Wang, Min, 2022. "Environmental Regulation and Firms’ Extensive Margin Decisions," EfD Discussion Paper 22-15, Environment for Development, University of Gothenburg.
    6. Sato, Misato & Dechezleprêtre, Antoine, 2015. "Asymmetric industrial energy prices and international trade," Energy Economics, Elsevier, vol. 52(S1), pages 130-141.
    7. Consoli, Davide & Marin, Giovanni & Marzucchi, Alberto & Vona, Francesco, 2016. "Do green jobs differ from non-green jobs in terms of skills and human capital?," Research Policy, Elsevier, vol. 45(5), pages 1046-1060.
    8. Andersen, Dana C., 2018. "Accounting for loss of variety and factor reallocations in the welfare cost of regulations," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 69-94.
    9. Olivier Deschenes, 2018. "Environmental regulations and labor markets," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-22, November.
    10. Baxamusa, Mufaddal & Jalal, Abu, 2024. "Environmental regulations, agency costs, and firm performance," Research in International Business and Finance, Elsevier, vol. 70(PA).
    11. Li, Xiao & Qiao, Yuanbo & Shi, Lei, 2019. "Has China's war on pollution slowed the growth of its manufacturing and by how much? Evidence from the Clean Air Action," China Economic Review, Elsevier, vol. 53(C), pages 271-289.
    12. Glenn Sheriff & Ann E. Ferris & Ronald J. Shadbegian, 2015. "How Did Air Quality Standards Affect Employment at U.S. Power Plants? The Importance of Stringency, Geography, and Timing," NCEE Working Paper Series 201501, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2015.
    13. Guan, Jin & He, Dongwei & Zhu, Qigui, 2022. "More incentive, less pollution: The influence of official appraisal system reform on environmental enforcement," Resource and Energy Economics, Elsevier, vol. 67(C).
    14. Xiaoyang Li & Yue M. Zhou, 2017. "Offshoring Pollution while Offshoring Production?," Strategic Management Journal, Wiley Blackwell, vol. 38(11), pages 2310-2329, November.
    15. Cui, Jingbo & Moschini, GianCarlo, 2020. "Firm internal network, environmental regulation, and plant death," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    16. Iris Claus & Les Oxley & Siqi Zheng & Cong Sun & Ye Qi & Matthew E. Kahn, 2014. "The Evolving Geography Of China'S Industrial Production: Implications For Pollution Dynamics And Urban Quality Of Life," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 709-724, September.
    17. Curtis, E. Mark, 2020. "Reevaluating the ozone nonattainment standards: Evidence from the 2004 expansion," Journal of Environmental Economics and Management, Elsevier, vol. 99(C).
    18. Dang, Tri Vi & Wang, Youan & Wang, Zigan, 2022. "The role of financial constraints in firm investment under pollution abatement regulation," Journal of Corporate Finance, Elsevier, vol. 76(C).
    19. Liu, Mengdi & Tan, Ruipeng & Zhang, Bing, 2021. "The costs of “blue sky”: Environmental regulation, technology upgrading, and labor demand in China," Journal of Development Economics, Elsevier, vol. 150(C).
    20. Marin, Giovanni & Vona, Francesco, 2021. "The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015," European Economic Review, Elsevier, vol. 135(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:110:y:2015:i:c:p:119-133. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.