Did Scrubbing the Government Clean Up the Air? Polluter Responses to China’s Anticorruption Campaign

Abstract: We examine whether targeting city mayors during a nationwide anticorruption campaign in China affected the concentration of sulfur dioxide (SO2), a major air pollutant, emitted from local coal power plants. Using the quasi-random timing of mayor investigations in an event study design, we show that investigating a mayor led to substantial reductions in SO2 concentrations at private coal power plants, but not state-controlled coal power plants. Private plants are less connected politically and receive less state support; for them, forming relationships with officials may be a low-cost alternative to environmental compliance. We find suggestive evidence that environmental improvements resulted from an increase in plants’ operation of SO2 pollution control equipment. Our results show empirically that efforts to improve local governance can sustainably reduce pollution.