The Effect Of The Implementation Of SO₂ Emissions Trading On Enterprise Market Power

With the acceleration of the reformation and opening,Chinese economic has a speedy development,at the same time the increasingly serious environmental and resource problems have emerged.Emission trading is a mechanism which use market force to governance environment pollution.This mechanism not only can reduce pollution emissions to the national total target,but also can achieve cost efficiency optimization,now has been respected in the world.The emissions trading achieves some achievements in environmental governance,this environment effect has been examined by some researches,but how the implementation of emissions trading affects the performance of enterprises is unknown.Therefore,the empirical analysis of the economic effects of emissions trading has some practical significance.This article selects companies market power to measure the economic effect by using the data of 16,609 on-going businesses from 1998 to 2007 in China Industrial Enterprise Database and the difference in difference method based on propensity score matching,analyzed the influence of the SO2 emission trading to companies market power,which carried out in China in 2002.The empirical analysis found that the implementation of emissions trading significantly improved the market forces by reducing the cost of production,also conducive to the improvement of social welfare.In order to further explore the economic effects of emissions trading,this article makes a further empirical analysis on the enterprises with different degree of pollution and market concentration.The empirical result shows that the implementation of emissions trading has a positive and significant impact to the market forces on heavily polluted enterprises and indicates that high-polluting enterprises can benefit from emissions trading.So it is necessary to encourage the enterprise participate in market transactions actively in order to improve the activity of the entire trading market.In the low concentration of market samples,the implementation of emissions trading has a significant positive impact on the companies market forces,can improve the market forces of enterprises,But it has no influence on the enterprises with high market concentration,which means,as a market mechanism,the emission trading can play a better role in the market with more competition.In the monopolized market,the implementation of emission trading is ineffective.Therefore,through the empirical research of the impact of implementation of emissions trading on the market forces of enterprises,it can provide evidences for better implementation and promotion of the emission trading policies to promote a greater role in pollution abatement.