The Environmental Consequences of Place‐Based Policies in China: An Empirical Study Based on SO2 Emission Data

Abstract Previous studies of place‐based policies in China have ignored their effect on pollution. Using event study and difference‐in‐differences methodologies, we investigated the consequences of place‐based policies on sulfur dioxide (SO 2 ) emissions. We first documented the increase in SO 2 emissions and SO 2 emission intensity in the inland region after 2003 at the provincial level. The firm‐level data for the period between 1998 and 2010 also showed that the performance of enterprises in noneastern regions in reducing SO 2 emissions had worsened relatively since 2003, and this effect was particularly strong in enterprises located in central and northeast China, where urban land supply experienced significant growth after 2003. We found that, compared with environmental regulation changes, inland region‐biased economic policies after 2003 were more important in explaining the relative changes in SO 2 emissions between coastal and inland regions. The policy implication is that the central government should address environmental consequences when designing place‐based economic policies.