Credible signaling to promote local compliance: Evidence from China's multiwave inspection of environmental protection

Abstract

AbstractDifferent from common knowledge on central–local information asymmetry, this study focuses on reverse information asymmetry, in which local governments may lack information on the intentions and resolve of the central government. Such information asymmetry can lead to a loss–loss scenario, wherein central‐government‐designed policies are eroded and local governments are punished. Arguably, with a multiwave inspection scheme, the central government can credibly signal its emphasis on certain policies and intentions to punish noncompliance, deterring yet‐to‐be‐inspected local governments. This argument is examined with China's Central Environmental Protection Inspection (CEPI) policy. Empirically, the CEPI policy can reduce pollution in the long run. Moreover, the credible signals generated by the previously completed inspection waves, which encourage local governments to rectify environmental regulations proactively, are essential. Furthermore, the strength of local compliance with central signaling largely depends on the hierarchical and geographical distances from the signaling source to the receiver.Chinese Abstract不同于对中央和地方政府间信息不对称的一般认识, 本研究关注中央和地方政府间的逆向信息不对称现象, 即地方政府可能缺乏对于中央政府意图和决心的了解。上述信息不对称的存在可能导致中央政府制定的政策无法得到有效落实, 同时地方政府由于未妥善履职而受到惩罚的双输局面。本研究指出, 通过分批次的督察机制, 中央政府可以就其对某些政策的重视程度和惩罚违规行为的决心发出可信的信号, 从而对尚未接受督察的地方政府形成有效威慑。本文以中国中央环境保护督察政策为例检验上述理论。实证结果表明, 长期来看中央环保督察政策可以有效控制污染。其核心机制在于, 已完成的督察批次所产生的可信信号, 可以激励其他地方政府主动改善环境规制, 形成对信号的有效响应。此外, 研究还发现地方政府对中央政府政策信号的响应强度取决于信号源的科层距离和地理距离。