Double externalities, market structure and performance: an empirical study of Chinese unrenewable resource industries

Abstract

Externality is always hard to evaluate and definition, but the sustainable development of resource-based industries is restrained by it; particular, externalities of unrenewable resources can be divided into intergenerational and environmental negative externalities. In this paper, double externalities are respectively estimated by the users' cost method and contingent valuation method with Chinese data separately. Then, SCP (structure-conduct-performance) model were built by added double externalities into the structure-conduct-performance econometric models based on panel data. The results showed that the administrative mergers and reorganization which were prompted by the government only increased the scale but not getting efficiency; large state-owned enterprises produced more externalities as well as less profits; development of China's economy had still mainly based on resource depletion rapidly and been paying a big price of environmental externalities.