Disguised Pollution : Industrial Activities in the Dark

We study the disguised pollution of industrial firms in China. We find that sulfur dioxide (SO2) readings increase by 15.9% in monitoring stations after sunset in high factory density areas, controlling for station-day and city-hour fixed effects. Physical inspections by the Ministry of Environmental Protection can only temporarily reduce disguised pollution, suggesting that reliance on physical inspections to enforce regulations is ineffective if firms can increase production activities to non-daylight hours. We show that direct monitoring, as is done with some large polluters in China, can prevent this and should be cost effective to extend to all the industrial polluters