Coordination or Contradiction : Evidence from Water and Air Pollution Regulations in China

Using a difference-in-difference-in-differences (DDD) strategy, we study the effects of simultaneous water and air pollution regulations on firms' emission behaviors and explore the driving forces behind their responses. We show that in China's eleventh Five-Year Plan (FYP), there exists a contradiction between chemical oxygen demand (COD) and sulfur dioxide (SO2) regulations. SO2 regulations' negative influence on output value cannot offset the positive impact on COD emission intensity, thus increasing COD emissions. Furthermore, we find SO2 regulations weaken the end-of-pipe treatment of COD while reinforcing the end-of-pipe treatment of SO2, reflecting the trade-off firms will face when multiple regulations are imposed