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Regulatory Uncertainty and Corporate Pollution Control Strategies: An Empirical Study of the ‘Pay for Permit’ Policy in the Tai Lake Basin

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  • Bing Zhang
  • Hanxun Fei
  • Yongjing Zhang

    (Graduate School of Public and International Affairs, University of Ottawa, Ottawa, ON K1N 6N5, Canada)

  • Beibei Liu

    (State Key Laboratory of Pollution Control and Resource Reuse, School of Environment, Nanjing University, Nanjing 210093, PR China)

Abstract

Frequent adjustments of environmental regulations usually cause business and investment risks, resulting in significant challenges for policy effectiveness. This paper examines how regulatory uncertainty affects decision making through an empirical study of the ‘Pay for Permit’ policy in the Tai Lake Basin in China. The results show that firms' willingness to decrease pollution is positively influenced by their perceived attitudes, social pressure, and perceived behavioural control. In addition, perceived regulatory uncertainty has significant impacts on social pressure and attitudes toward pollution control. Firms that perceive less regulatory uncertainty are more inclined to adopt antipollution strategies under the Pay for Permit policy. To reduce regulatory uncertainty, China's policy makers should maintain a consistent level of environmental regulations, set clear and reliable long-term policy targets, and strengthen policy enforcement.

Suggested Citation

  • Bing Zhang & Hanxun Fei & Yongjing Zhang & Beibei Liu, 2015. "Regulatory Uncertainty and Corporate Pollution Control Strategies: An Empirical Study of the ‘Pay for Permit’ Policy in the Tai Lake Basin," Environment and Planning C, , vol. 33(1), pages 118-135, February.
    • Handle: RePEc:sae:envirc:v:33:y:2015:i:1:p:118-135
    DOI: 10.1068/c12101
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    Cited by:

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    3. Wang, Yuze & Eriksson, Tor & Luo, Nengsheng, 2023. "The health impacts of two policies regulating SO2 air pollution: Evidence from China," China Economic Review, Elsevier, vol. 78(C).

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