Credit: CC0 Public Domain Critics claim environmental regulations hurt productivity and profits, but the reality is more nuanced, according to an analysis of environmental policies in China by a pair of Cornell economists. The analysis found that, contrary to conventional wisdom, market-based or incentive-based policies may actually benefit regulated firms in the traditional and "green" energy sectors, by spurring innovation and improvements in production processes. Policies that mandate environmental standards and technologies, on the other hand, may broadly harm output and profits. "The conventional wisdom is not entirely accurate," said Shuyang Si, a doctoral student in applied economics and management. "The type of policy matters, and policy effects vary by firm, industry and sector." Si is the lead author of "The Effects of Environmental Policies in China on GDP, Output, and Profits," published in the current issue of the journal Energy Economics . C.-Y. Cynthia Lin Lawell, associate professor in the Charles H. Dyson School of Applied Economics and Management and the Robert Dyson Sesquicentennial Chair in Environmental, Energy and Resource Economics, is a co-author. Si mined Chinese provincial government websites and other online sources to compile a comprehensive data set of nearly 2,700 environmental laws and regulations in […]

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