Industries TFP and Environmental Regulation Cost Analysis Using Malmquist–Luenberger

Abstract

Environmental problem is a worldwide focus, so as the effect of environmental regulation on economic. In this paper, we constructed a model including energy consumption and integrated pollutant emissions of "Three wastes" as "bad" output. This paper used Malmquist –Luenberger based on directional distance function to measure TFP and environmental regulation cost of Chinese 36 industries from 2001 to 2010. The result was that: From the overall analysis, the TFP was lower after considering the environmental regulation. Technological progress was the main driver of productivity growth. Environmental regulation brought about a certain cost; from the industry analysis, there were some differences between industries on TFP growth and the cost of environmental regulation. The monopoly and heavy industrieswere the focus in the industry; from the annual analysis, TFP increased during "Eleventh Five-Year Plan" period, mainly drived by technological progress.