Waste gas emissions, air pollution treatment, and industrial profit: evidence from China and global implications of green development.

Abstract

This paper proposes a simple model to theoretically analyze the impacts of emissions of waste gases on industrial profit and mainly finds that industrial producers yield products to pursue profit but emit waste gases, protecting atmospheric environment demands for decline in waste gases, emissions impact profit when the process of production is altered as result of public regulations, and actively treating emissions ease the distortions of production and maintain profit. As a comparison, industrial profit is not impacted by emissions when producers are allowed to emit freely. After theoretical analysis, this study also empirically tests the relationship between the emissions of waste gases and profit as evidenced in China and finds that emissions do not significantly impact profit, except for sulfur dioxide with significantly negative impact; industrial producers with increased capacity for treating waste gases obtained more profits. As a result, the cost expended on treating pollution was compensated in the Chinese industrial sector. Successfully declining waste gases for atmospheric environmental protection and maintaining industrial profit for economic output and social development in the Chinese local economy has global implications because many other countries and regions primarily pursue green and sustainable development.