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Competing To Comply: Corporate concentration and pollution enforcement in China

Thu, August 31, 2:00 to 3:30pm, Westin St. Francis, Essex


China is in the process of a transformation in pollution regulation and enforcement. While the majority of news coverage continues to be about poor air quality, there has been little notice that overall air quality in China improved for five consecutive years, documented through NASA satellite data in sources as diverse as peer-reviewed research publications (Krotkov et al 2015) and Greenpeace analysis. Moreover, this transformation has occurred within an authoritarian system, and the declines in some pollutants began as early as 2008, well before the well-documented public outcry of 2013. One important and little-studied aspect of pollution control in China has been that it is sector specific with most of the gains coming from the power sector. The sector has undergone a structural transformation over the past fifteen years from a monopoly supplier to a highly competitive production environment, all within a state-owned framework. The sector also offers the opportunity to examine the impact of this increased competition at the subnational level, because much of this pollution is local and is aggregated at the provincial level, and because provinces opened up by different amounts and at different times. Using mixed methods, both a full panel of power sector competitiveness (as measured by the Herfindahl Hirschman Index or HHI) and emissions, and intensive process-tracing interviews, the paper examines the role played by competition within the sector in determining regulatory outcomes both at the standard-setting and at the standard-enforcement phase of regulatory compliance. The paper finds that even within a state-sector dominated industry industrial competitiveness becomes a tool for government regulators: companies begin to compete on compliance in order to gain permits and other government-issued advantages.