Presentation Title
Smoke and Mirrors: Did China's Environmental Crackdowns Lead to Persistent Changes in Polluting Firm Behavior?
Sloan School of Management, Massachusetts Institute of Technology
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Gibson 296


Sharp, short-lived increases in rule enforcement are common in hierarchical organizations facing multiple objectives. Using data from China that links quasi-random variation in the intensity of environmental policing to high-frequency air pollution data, we show that crackdowns in over short (one-month) periods result in a sharp (approximately 30%) reduction in sulfur dioxide pollution around coal power plants. Pollution reverts to prior levels after crackdowns end. The pace of reversion is faster for firms that outrank the city government, suggesting that hierarchical ties to China’s central authorities attenuate a firm’s accountability to the local environmental protection bureau. Engaging citizen informants deters a subset of egregious polluters during crackdowns, but has no lasting effect, especially among outranking firms. Our results document empirically the limits of a highly centralized approach to improving environmental governance through short-lived enforcement crackdowns.

Valerie J. Karplus is Assistant Professor of Global Economics and Management at the MIT Sloan School of Management. Karplusstudies resource and environmental management in firms operating in diverse national and industry contexts, with a focus on the role of institutions and management practices in explaining performance. Karplus is an expert on China’s energy system, including technology and business model innovation, energy system governance, and the management of air pollution and climate change.  She studies the determinants of clean energy transitions in emerging markets, with projects in China, India, and Sub-Saharan Africa. From 2011 to 2015, she directed the MIT-Tsinghua China Energy and Climate Project, a five-year research effort focused on analyzing the design of energy and climate change policy in China, and its domestic and global impacts. She holds a BS in biochemistry and political science from Yale University and a PhD in engineering systems from MIT.