Market-based Regulation Research Articles

Emission regulation: Prices, quantities and hybrids with endogenous technology choice

This paper examines the investment incentives of market-based regulation, focusing on the technology characteristics that different regulatory schemes tend to incentivize. The firms’ technology choice is socially optimal if and only if the aggregate emission allowance supply is completely inelastic. Furthermore, in the presence of uncertainty, elastic emission allowance supply, and strictly convex environmental damage, it is optimal to tax investments in technologies that induce a large variance in emissions. Lastly, price elastic supply of emission allowances may either increase or decrease the volatility in the product market, depending on the risk environment the firms face. The results indicate that introduction of permit price-stabilizing measures in an emission trading system will come at the cost of suboptimal technology investments, and may also lead to increased fluctuations in product prices.

External pressure, internal managerial interpretation and green entrepreneurial orientation

PurposeBased on the attention-based view (ABV), this study examines the mechanism of external pressure and internal managerial interpretation affecting the promotion of green entrepreneurial orientation (GEO) of agricultural enterprises.Design/methodology/approachBased on data collected from 208 agricultural enterprises in China, the conceptual model was tested by using hierarchical regression.FindingsThe results show that managerial interpretation can affect the promotion of GEO. Command and control regulation, market-based regulation and green market pressure are important external pressures that affect the promotion of GEO. In addition, managerial interpretation mediates the relationship between command and control regulation and GEO, market-based regulation and GEO, as well as green market pressure and GEO.Practical implicationsThis study proposes a key path for promoting the adoption and implementation of GEO by agricultural enterprises. The research results provide experience for emerging and developing countries to promote the GEO of agricultural enterprises, which is helpful to alleviate the environmental problems caused by the development of agricultural enterprises.Originality/valueFor the first time, this study introduced the ABV into the research of GEO. The research results enrich the theoretical perspective of GEO and expand the research field of the ABV. In addition, this study fills the research gap that existing research has not paid enough attention to the internal driving factors of GEO and opens the black box between the external pressure and GEO.

Impact of Heterogeneous Environmental Regulations on Green Innovation Efficiency in China’s Industry

Innovation is the primary driving force for development, and green innovation efficiency (GIE) plays a key role in regional sustainable development. Moreover, environmental regulations (ERs) are also crucial for innovation and green transformation. Considering the heterogeneity of ERs, we assess the dynamic GIE in the industrial sectors of China. We detect their spatial clustering characteristics, and distinguish the impacts of ERs. Results suggest that there exist significant differences in GIE. Provinces such as Hainan, Guangdong and Zhejiang are ranked high, while Gansu, Inner Mongolia and Ningxia are ranked at the bottom, which shows some spatial dependence. The relationship between the administrative regulation and GIE demonstrates a U-shape, and has not reached a critical point, whereas the relationship between the market-based regulation and GIE possesses an inverted U-shape, which is highly significant. Furthermore, a positive linear relationship exists between the lagged public participation regulation and GIE. This paper also proposes that the economic development level and industrial structure are vital factors in accelerating industrial GIE. These conclusions provide scientific support for formulating regional transformation strategies.

Counterfactual Modeling of Multispecies Fisheries Outcomes under Market-Based Regulation

Counterfactual Modeling of Multispecies Fisheries Outcomes under Market-Based Regulation

Effect of market-based regulations on corporate carbon disclosure and carbon performance: global evidence

PurposeIn this study, the authors examine the relationships between market-based regulations and corporate carbon disclosure and carbon performance. The authors also investigate whether these relationships vary across emission-intensive and non-emission intensive industries.Design/methodology/approachThe study sample consists of the world's 500 largest companies across most major industries over a recent five-year period. Country-specific random effect multiple regression analysis is used to test empirical models that predict relationships between market-based regulations and carbon disclosure and carbon performance.FindingsResults indicate that market-based regulations significantly and positively affect corporate carbon performance. However, market-based regulations do not significantly affect corporate carbon disclosure. This study also finds that the association between regulatory pressures and carbon disclosure and carbon performance varies across emission-intensive and non-emission-intensive industries.Research limitations/implicationsThe findings of this study have key implications for policymakers, practitioners and future researchers in terms of understanding the factors that drive businesses to increase their carbon performance and disclosure. The study sample consists of only large firms, and future researchers can undertake similar studies with small and medium-sized firms.Practical implicationsThe results of this study are expected to help business managers to identify the benefits of adopting market-based regulations. Regulators can use this study’s results to evaluate if market-based regulations effectively improve corporate carbon performance and disclosure. Furthermore, stakeholders may use this study to evaluate and improve their businesses' reporting of carbon disclosure and performance.Originality/valueIn contrast to current literature that has used command and control regulations as a proxy for regulation, this study uses market-based regulations as a proxy for climate change regulations. In addition, this study uses a more comprehensive measure of carbon disclosure and carbon performance compared to the previous studies. It also uses global multi-sector data from carbon disclosure project (CDP) in contrast to most current studies that use national data from annual reports of sample firms of specific sectors.

The Impact of China's ETS on Corporate Green Governance Based on the Perspective of Corporate ESG Performance.

To achieve China's "dual carbon" and common prosperity goals, corporate green governance is crucial. A key tool for promoting green growth is environmental legislation, particularly market-based regulation. With China's carbon emission trading as a natural experiment, we adopt the DID method to quantitatively compare the gap between ESG performance of pilot and non-pilot carbon trading enterprises before and after policy implementation, thereby examining the impact, mechanism and optimization conditions of market-based environmental policy on corporate green governance based on panel data of China's A-share listed companies from 2007 to 2019. In addition, PSM-DID and other methods are employed for preventing estimation bias caused by sample self-selection bias. It is found that: (1) the green governance level of pilot firms can be considerably improved by a carbon emission trading scheme (ETS); (2) the ETS primarily encourages enterprises to uphold their ESG obligations through increasing regulatory pressure from the government and corporate involvement in clean innovation; (3) enhancing regional marketization can strengthen the impact of carbon trading policy, and enterprises that are large and non-state-owned exhibit better performance with regard to green governance as a result of carbon trading policy. This paper provides practical experience for promoting corporate green governance to achieve the "dual carbon" goal based on a market mechanism from a micro perspective.

How does carbon emissions trading scheme affect emission reduction decisions of coal-fired power plants? An evolutionary game theoretic perspective

Carbon emissions trading scheme (CETS) is widely regarded as a cost-effective marketbased regulation for carbon abatement. In the context of CETS, this study develops an evolutionary game model that incorporates two representative coal-fired power plants and a government. Our model captures the interplay of emission reduction strategies between coal-fired power plants and endogenously incorporates government regulatory decisions. We analyze the strategic decisions of coal-fired power plants by discussing the dynamics and equilibrium of the game. Our findings demonstrate that in the absence of government implementation of CETS, coal-fired power plants refrain from investing in carbon abatement. However, with the enforcement of CETS, along with sufficient penalties for excessive carbon emissions, coal-fired power plants become inclined to invest in emission reduction. Furthermore, the willingness of coal-fired power plants to invest in carbon abatement exhibits a negative relationship with both the quota and the cost of emission reduction.

The Moral Limits of Market-Based Mechanisms: An Application to the International Maritime Sector.

This paper questions the dominance of market-based mechanisms (MBMs) as the primary means of climate change mitigation. It argues that, not only they are unsuccessful on their own terms, but also they actually make the task more difficult by the unintended consequence of normalising the act of polluting and crowding out alternatives. The theoretical contribution of the paper is to draw a link between two bodies of literature. The first is the business ethics literature on the dominance of market-based rather than direct regulation, and the second is the literature on market ethics, particularly the work of Michael Sandel on how MBMs crowd out non-market norms. The empirical contribution is to use the international maritime transport sector to illustrate the way market-based regulation renders alternatives such as direct regulation and supply-side approaches invisible.

Can comprehensive environmental regulation trigger green innovation? evidence from the low-carbon city pilot policy and green patents of listed industrial enterprises

ABSTRACT Using the gradual promotion of China’s low-carbon city pilot policy (LCCPP) as a quasi-natural experiment, this study investigates the impact of comprehensive environmental regulation on green innovation represented by green patents of listed industrial enterprises. Our results revealed that enterprises located in cities with LCCPP produced a high intensity and volume of green patents. LCCPP increased the proportion of green invention, green utility model, and total green patents by 1.26%, 0.72%, and 0.84%, respectively. Moreover, we found that enterprises located in eastern cities and those with high research and development intensity and productivity were likely to benefit most from LCCPP, and LCCPP also triggered green innovation in high-emission and high-energy-consuming industrial sectors. Our results suggest that, for developing economies, a flexible and comprehensive environmental regulation that combines command-and-control and market-based regulations would be preferable for promoting enterprises’ green innovation.

The internal-structural effects of different types of environmental regulations on China's green total-factor productivity

Environmental regulation is a crucial tool for promoting green economic development, but how it will affect the internal structure of green economy is unknown. By applying three-hierarchy meta-frontier DEA and panel data from 2001 to 2018, we measured five key internal factors of China's green total-factor productivity (GTFP), i.e., technological innovation, industrial structure, regional balance development, scale, and resource allocation efficiency. On this basis, we examined the internal-structural effects of different types of environmental regulations on GTFP. The results show that there are distinct non-linear relationships (“U” or inverted “U” curve) between different types of environmental regulations and the internal factors of GTFP. And different types of environmental regulations have quite various internal-structural effects on GTFP: (1) the command-and-control regulation can improve GTFP by inducing technological innovation, optimizing industrial structure, improving scale efficiency, and promoting regional coordinated development; (2) the market-based regulation exerts negative effect on GTFP by inhibiting technological innovation and reducing industrial structural, scale, and resources allocation efficiencies. While it has positive effect on regional coordinated development; and (3) the voluntary regulation has negative effect on GTFP mainly by inhibiting technological innovation and regional balance development efficiencies, while it can advance scale efficiency.

Influence of Environmental Regulation on Corporate Green Supply Chain Management: The Regulating Effect of Environmental Dynamism

Environmental pollution, resource waste, and ecological imbalance have raised global concerns. Against this backdrop, green supply chain management (GSCM) becomes the focus of corporate sustainable development. Based on the institutional theory, thus study explores the influence of command-and-control environmental regulation (CCER) and market-based environmental regulation (MBER) over GSCM, as well as the regulating effect of environmental dynamism on the influence. A total of 191 valid responses were obtained through a questionnaire survey. The analysis of these responses shows that: CCER and MBER positive affect GSCM; environmental dynamism negatively regulates the correlations of CCER and MBER with GSCM. Based on these findings, theoretical guides and managerial implications were obtained for corporate GSCM.

How to Improve Environment Performance? The Comparison of Stakeholder Perceptions on How to Improve Air Quality in China

The air quality and carbon neutrality strategies in China has attracted the growing concern of multiple stakeholders. Through face-to-face surveys conducted in five major cities in North China, we compared the stakeholders’ perceptions. Our research reveals conflicting perceptions among stakeholders. On the one hand, local authorities and academics prefer to focus on market-based regulation to prevent air pollution. Enterprise managers, however, do not want to be regulated. On the other hand, social groups expect more information about air pollution to be released, but local authorities do not see releasing that information as a top priority. These differences of perceptions can actually be useful in terms of policymaking.

Heterogeneous environmental regulations and green economic efficiency in China: the mediating role of industrial structure.

Industrial upgrading is the key to promoting green economic efficiency. Coordination between environmental regulations and industrial structure can lead to sustainable economic growth. However, insufficient attention has been paid to the mechanism by which environmental regulation (ER) promote green economic efficiency (GEE) under the mediating role of industrial structure optimization. Using robust and comprehensive measures of green economic efficiency, we assess how various environmental regulations affect green economic efficiency as well as the intermediate effect of industrial structure of a certain province with provincial panel data during the period 2003-2017. The results of dynamic panel two-step system generalized method of moments (GMM) confirm the heterogeneous effects of the three types of ER, namely control-and-command regulation, market-based regulation, and voluntary regulation on GEE in China. The spatial analysis demonstrates that control-and-command and voluntary regulations significantly accelerate GEE in inland provinces, while they have insignificant effect in coastal provinces. Based on the mediating analysis, we find that market-based regulation is conducive to GEE through both advanced and rationalized industrial structure, whereas control-and-command regulation improves GEE through advanced industrial structure only. The voluntary-based regulation on one hand stimulates GEE through advanced industrial structure, but on other hand impedes it through rationalized industrial structure. The results could provide critical insights and a theoretical basis for policy makers in reasonable optimization of industrial structure and guaranteeing green economic efficiency.

Does Environmental Regulation Promote Industrial Green Technology Progress? Empirical Evidence from China with a Heterogeneity Analysis

The complex relationship between environmental regulation and green technology progress has always been a hot topic of research, especially in developing countries, where the impact of environmental regulation is important. Current research is mainly concerned with the impact of the single environmental regulation on technological progress and lacks study on the diversity of environmental regulations. The main purpose of this paper is to examine the heterogeneity of the effects of different types of environmental regulation on industrial green technology progress. As China’s scale of economy and pollution emissions are both large, and the government has also made great efforts in environmental regulation, this paper takes China as the example for analyses. We first use the EBM-GML method to measure the industrial green technology progress of 30 provinces in China from 2000 to 2018, and then apply the panel econometric model and threshold model to empirically investigate the influence of 3 types of environmental regulation. The results show that, first, the impacts of environmental regulation on industrial green technology progress are significantly different; specifically, command-based regulation has no direct significant impact, and autonomous regulation has played a positive role, and market-based regulation’s quadratic curve effect is significant, in which the cost-based and investment-based tool presents an inverted U-sharped and U-sharped, respectively. Second, there may be a weak alternative interaction among different types of environmental regulation. Third, a market-based regulatory tool has a threshold effect; with the upgrading of environmental regulation compliance, the effect of a cost-based tool is characterized by “promotion inhibition”, and that of an investment-based tool is “inhibition promotion”. Finally, the results of regional analysis are basically consistent with those of the national analysis. Based on the study, policy enlightenment is put forward to improve regional industrial green technology progress from the perspective of environmental regulation. This paper can provide a useful analytical framework for studying the relationship between environmental regulation and technological progress in a country, especially in developing countries.

Effects of Loan Loss Provisions on Loans Disbursements Case Study of SACCOs in Kenya

The study sought to establish the relationship between interest rates and loan provision in SACCOs in Kenya. Descriptive survey research design and stratified random sampling method were used. The sample size used was 84 respondents comprising of three operation managers, four credit officers, three customer service officers and seventy-four registered Sacco’s members. The study was guided by Classical interest, Keynesian Liquidity and Time preference theories. Results indicated that interest rates charged on loans had the least influence on loan provisions. The study recommends that the government through Central Bank and Kenya Bankers Association to advocate for more market-based regulations which would ensure affordable and accessible financing for the small businesses and startups that promotes enabling environments for entrepreneurial activities. The findings contributed to new knowledge to literature and theory. Keywords: Loan, Loss Provision, Loan Disbursement, Farmers, SACCO.

Adopting a Low Carbon Fuel Standard: Pruning Discriminatory Factors From California’s Regulatory Template

As part of a plan to curtail climate change, states with executive targets of net-zero GHG by 2050 necessitate using a proven approach to reduce GHG from the transportation sector, which nationally accounts for 28% of GHG emissions—more than any other sector. Any substantial reduction in total carbon dioxide (CO2) emissions will necessarily address this fossil fuel reliant sector. An approach modeled after the California Low Carbon Fuel Standard (LCFS), as part of a comprehensive climate change legislation, is indispensable to achieving a meaningful GHG reduction and, thus, should be pursued. Although set out as a model regulatory template, California’s LCFS has not been immune to legal challenges since its inception, and this Comment identifies certain impermissible aspects of this market-based regulation that can be adjusted to bring it in compliance with Dormant Commerce Clause doctrine and the letter of the U.S. Constitution.

Can Environmental Regulations Promote Greenhouse Gas Abatement in OECD Countries? Command-and-Control vs. Market-Based Policies

In response to global warming, greenhouse gas (GHG) abatement has been one of the top priorities of governments, and a large variety of environmental regulation policies have been implemented in past decades. Using panel data from 27 OECD countries over the period of 2005–2012, this study measures and compares the stringency level of command-and-control and market-based environmental regulations. The differentiated impacts and indirect effects of environmental regulations on GHG emissions are tested empirically. The results show that: (1) Both command-and-control and market-based environmental regulations have effects on GHG abatement in OECD countries, and there is a non-linear relationship between environmental regulations and GHG discharge, in which stringent command-and-control environmental regulations and mild market-based regulation policies are preferred; (2) Command-and-control environmental regulations reduce GHG emissions by improving the technological level, rather than the energy consumption structure. In contrast, market-based environmental regulations can promote GHG abatement through the intermediary effects of both technological progress and the energy consumption structure. The findings provide implications for OECD countries to further reduce GHG emissions.

Water Pollution Control in Developing Countries: Policy Instruments and Empirical Evidence

Severe ambient water pollution is common in many developing countries. A broad array of regulatory and other policy instruments can be used to improve water quality. However, some approaches have been studied more than others, and there are many additional challenges that are specific to the developing country setting. This article describes a range of prescriptive and market-based regulations, voluntary programs, and other policy instruments to control water pollution and also reviews the empirical evidence on the effectiveness of these approaches in practice, with a focus on developing countries. We also examine additional challenges for implementing and assessing such policies in developing countries, including data availability and quality issues, insufficient monitoring and enforcement, rent-seeking in regulatory systems, and jurisdictional spillovers where regulation is decentralized. Finally, we highlight important gaps in the published empirical research in this area.

How Do Different Types of Environmental Regulations Affect Green Innovation Efficiency?

Environmental regulation policies are being continuously enriched today. To effectively improve green innovation efficiency through environmental regulations, it is urgent to better understand the impact of different environmental regulations on green innovation efficiency (GIE). However, due to the defects of previous methods for measuring GIE, existing studies may have deviations when analysing the effect of environmental regulations on GIE. To fill this gap, using Shaanxi, China, as a case study, the present study proposes a network data envelopment analysis (DEA) model based on neutral cross-efficiency evaluation to accurately measure the GIE of Shaanxi during the period of 2001–2017. On this basis, this study further analysed the impact of different types of environmental regulations on GIE from three aspects: causality, evolutionary relationships, and effect paths. The results indicate that (1) the GIE of Shaanxi Province showed a “fluctuation-slow growth-steady growth” trend during 2001–2017, and after 2014, the problem of an uncoordinated relationship between technology research and design (R&D) and technology transformation began to appear; (2) there was a linear evolutionary relationship between command-and-control environmental regulation and GIE and a “U”-shaped evolutionary relationship between market-based/voluntary environmental regulation and GIE; and (3) command-and-control environmental regulation and voluntary environmental regulation affected GIE mainly at the technology R&D stage, while market-based environmental regulation ran through the entire process of green innovation activities. This study improves the evaluation methods and theoretical systems of GIE and provides the scientific basis for government decision-makers to formulate environmental regulation policies.

The Academic Profession in Neoliberal Times: A Gendered View

While witnessing a feminization of its workforce, the academic profession has experienced a process of market-based regulation that has contributed to the precarization of early career phases and introduced a managerial culture based on competition, hyper-productivity, and entrepreneurship. This paper aims to investigate the implications of these changes for female academics. A mixed model research design was used based on administrative data on the Italian academic population and qualitative interviews with life scientists within a specific academic institution. Results show that the implications of university transformations in terms of gender heterogeneity are complex. On the one hand, the increased precarization of early career stages has increased gender inequalities by reducing female access to tenured positions. On the other, the adoption of performance-based practices has mixed consequences for women, entailing both risks and opportunities, including spaces of agency which may even disrupt male-dominated hierarchies.