Enforcement of Capacity-Differentiated Regulations in China: Evidence from Coal-Fired Power Plants
Qi Sun1(),Tiao Li2(),Fang Wu3()
1. School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433, China 2. School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433, China 3. School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433, China
This article investigates the effects of the capacity-differentiated regulations that are popular in China. These regulations usually involve measures that gradually shut down small plants while allowing them to continue to operate until shutdown. We use a panel data set from coal-fired power plants during the period from 2003 to 2010 and employ the input demand equations and the difference-in-differences method to quantify the effects of these regulations. Our findings, which are robust to a variety of specifications, indicate that regulations of this type reduce capital spending and fuel efficiencies in the vulnerable small plants that are subject to shutdown under this regulation. We find no effect on the operating expenses of these small plants.
