Inspections, pollution prices, and environmental performance: evidence from China

In environmental economics, monitoring and enforcement issues have attracte d relatively little research effort. Moreover, the bulk of the literature o n these issues has been of a theoretical nature. Few have empirically analy sed the impact of monitoring and enforcement activities on the environmenta l performance of polluters. Moreover, all existing studies have been perfor med in the context of developed countries. A purpose of the current paper i s to partially fill this important gap by exploring the impact of both insp ections and pollution charges on the environmental performance of polluters in China. While pollution charges represent an important pillar of the Chi nese environmental regulatory system, our results indicate that inspections dominate and better explain the environmental performance of industrial po lluters. (C) 2001 Elsevier Science B.V. All rights reserved.