Problem
Research questions and friction points this paper is trying to address.
administrative boundary reforms
firm pollution
spatial reallocation
institutional path divergence
China
Administrative Boundary Reforms and Firm Pollution in China: Institutional Path Divergence and Spatial Reallocation of Pollution
🤖 AI Summary
This study investigates how China’s administrative division reforms reshape the spatial distribution of pollution and firm-level emission behavior. Leveraging firm-level pollution panel data and satellite remote sensing imagery from 1998 to 2013, we employ a boundary-pairing design to identify the differential environmental effects of county-to-district mergers (centralization) and county-to-city upgrades (decentralization). The analysis reveals that administrative boundaries, rather than geographic distance, drive the spatial reallocation of pollution, effectively distinguishing local emission reductions from net reductions. Results indicate that centralizing reforms decrease NOx emissions within the jurisdiction but exacerbate pollution leakage to neighboring counties. Conversely, decentralizing reforms significantly elevate overall pollution levels and generate substantial welfare losses.
📝 Abstract
Administrative boundary reforms in China alter the assignment of local authority and growth incentives without changing physical geography. We study two reforms with opposite institutional content---county-to-district (centralization: a county absorbed into a municipality as an urban district) and county-to-city (empowerment: a county upgraded to a county-level city)---using a firm-year pollution panel (1998--2013) and a border-pair research design that compares firms on opposite sides of the same county border. Centralizing reform lowers local NOx intensity by 14.8% through cleaner production, without shrinking output or employment; empowering reform raises COD, dust, and wastewater levels by 87--95\% through dirty growth. The local abatement is not net abatement: NOx rises in same-prefecture neighbor counties (+0.77, p<0.01), reallocation follows administrative boundaries rather than geographic distance, is confirmed in satellite ambient data, and is not driven by wind or water transport. The reallocation operates through incumbent neighbor firms becoming dirtier, not through firm relocation or new entry. A back-of-the-envelope welfare calculation yields a statistically insignificant welfare gain from the only significant abatement (NOx, \textyen 47 million/yr, CI crossing zero) and a damage of -\textyen 2.3 billion/yr from county-to-city reform. These findings show that boundary reforms reshape the spatial configuration of pollution across administrative boundaries rather than reducing it.
Innovation
Methods, ideas, or system contributions that make the work stand out.
Administrative boundary reforms
Border-pair design
Spatial reallocation
Firm-level pollution
Institutional divergence
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