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China's economic reform over the past 30 years has allowed the free market to drive economic development. However, government still plays a key role in the energy sector by allocating energy conservation and emissions abatement. How does the government make an equity decision as a tradeoff to market efficiency? This is an unanswered question. The purpose of this paper is to illustrate the government's preference toward equity and efficiency. Using the provincial level CO2 intensity allocation data, we investigate the political decision that the government made based on the equity and efficiency criteria. We find that the equity index plays a more important role than the efficiency index in determining the CO2 intensity target. In addition, political factors such as social stability are found to be important factors.
Ni, Jinlan; Wei, Chu; and Du, Limin, "Revealing the Political Decision Toward Chinese Carbon Abatement: Based on Equity and Efficiency Criteria" (2015). Economics Faculty Publications. 42.
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