What are the effects of different tax policies on China's coal-fired power generation industry? An empirical research from a network slacks-based measure perspective

Abstract Data Envelopment Analysis (DEA) has been widely applied to evaluate performance in the power generation industry. Nevertheless, most studies view the production system as a “black box”. Few studies attempt to deal with the case of China's thermal power generation industry in the framework of network DEA. Separating the overall power generation process into two internal stages: the production stage and the pollutant abatement stage, with the pollutant emissions as intermediate products, this paper employs a network slacks-based measure (SBM) model to research the production efficiency and environmental efficiency of China's coal-fired power generation industry from 2006 to 2010, under two different tax policies. These two tax policies are the pollution tax policy to negatively penalize for emissions of pollutants and the tax deductions or exemptions policy to positively encourage environmental protection. The empirical results show that the effect of compulsory measures was better than that of self-motivation measures for China's environmental protection in this observation period. Another important finding is that the year 2008 was a turning point in the five years. Statistical analysis shows that the effects of the two different policies were statistically independent.

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