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Management Practices and Climate Policy in China

Author

Listed:
  • Soo Keong Young
  • Ulrich J. Wagner
  • Peiyao Shen
  • Laure de Preux
  • Mirabelle Muȗls
  • Ralf Martin
  • Jing Cao

Abstract

We investigate how management quality moderates the impact of carbon pricing on Chinese firms. Based on interviews with managers and lead engineers at manufacturing firms in Hubei and Beijing, we construct a novel index on climate-change related management practices and link it to firm data from various sources. We document higher average productivity and more green innovation among firms that are well managed according to this index. In an event study of the introduction of regional cap-and-trade schemes for CO2, we analyze how these management practices interact with treatment. While treated firms reduced coal consumption more than control firms, this effect is statistically significant only for well-managed firms. The reduction could have been 25% greater if badly managed firms had been well managed. Our study highlights that good management practices, in particular energy monitoring, enhance the effectiveness of market-based climate policies by enabling firm to rationally comply with them.

Suggested Citation

  • Soo Keong Young & Ulrich J. Wagner & Peiyao Shen & Laure de Preux & Mirabelle Muȗls & Ralf Martin & Jing Cao, 2023. "Management Practices and Climate Policy in China," CRC TR 224 Discussion Paper Series crctr224_2023_466, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2023_466
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    Keywords

    climate policy; firm behavior; management practices; emissions trading scheme; policy evaluation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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