Environmental and Resource Economics

, Volume 24, Issue 3, pp 245-262

First online:

Incomplete Enforcement of Pollution Regulation: Bargaining Power of Chinese Factories

  • Hua WangAffiliated withDevelopment Research Group, The World Bank
  • , Nlandu MamingiAffiliated withThe University of the West Indies
  • , Benoit Laplante
  • , Susmita DasguptaAffiliated withDevelopment Research Group, The World Bank

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Only a limited number of papers haveempirically examined the determinants of themonitoring and enforcement activities performedby the environmental regulator. Moreover, mostof these studies have taken place in thecontext of developed countries. In this paper,we empirically examine the determinants of theenforcement of pollution charges in China.More precisely, we seek to identify thecharacteristics which may give firms more orless bargaining power with local environmentalauthorities pertaining to the enforcement(collection) of pollution charges. Firms fromthe private sector appear to have lessbargaining power than state-owned enterprises.Firms facing an adverse financial situationalso appear to have more bargaining power.Finally, we also show that the higher thesocial impact of a firm's emissions (asmeasured by the presence of complaints), thesmaller the bargaining power of the firms withlocal environmental authorities.

bargaining power enforcement