The Impact Of Environmental Regulation On The Marginal Abatement Cost Of Industrial Enterprises ——Evidence From The 11th Five-year Emission Reduction Targets

Since the implementation of reform and opening up in 1978,China has made great achievements in economic and social aspects,but the rapid industrialization and urbanization process has caused China to face major problems such as ecological destruction and environmental degradation.So how to control the over-emission of pollution has been what needs to be solved badly for some government organization and industrial enterprises if we want to achieve the industrial sector growth steadily.This paper estimates the shadow price of SO₂ and COD emissions for China’s industrial enterprises over the period 1998 to 2009 by using the quadratic directional output distance function and the stochastic frontier analysis（SFA）,and further uses the difference-in-difference-in-differences（DDD）model and a variety of robustness checks to study the effect of provincial SO₂ reduction emission targets in the 11th Five-Year Plan on the marginal abatement cost（MAC）of SO₂ emissions for industrial enterprises.The results show that the average shadow prices of SO₂ and COD emissions are 3454.96 Yuan/ton and 17560.18 Yuan/ton,respectively.During the study period,the annual shadow price of two major pollutants increased monotonically.In addition,heterogeneity analysis of the estimated results shows that non-state-owned enterprises,larger enterprises,and enterprises located in the eastern region have higher shadow price of SO₂ and COD emissions.Finally,we confirm that provincial SO₂ reduction emission targets in the 11th Five-Year Plan significantly increases the MAC of SO₂emissions for industrial enterprises.The results show that when the pollution reduction target is one standard deviation higher than the mean value,the shadow price of SO₂emissions of industrial enterprises whose SO₂ emissions are 10%higher than the mean value increases by 24.80 Yuan/ton.Moreover,we find the regulation impact is greater for state-owned enterprises,larger enterprises,and enterprises located in the central and western regions.