Impacts of deregulation reform on PM2.5 concentrations: A case study of business registration reform in China.

In contrast to the surge of attention to China's business registration reform per se , the environmental externalities of the reform have been somewhat neglected by mainstream academics. Adopting the difference-in-differences method alongside propensity-score matching, and utilizing the panel data of 283 cities in China from 2000 to 2013, this paper investigates the impacts of the deregulation reform on PM2.5 concentrations. The results indicate that the business registration reform has contributed to PM2.5 air pollution, with above-average impacts in central areas, but insignificant effects in western China. Furthermore, the treatment effects are stronger in cities with larger entry of small and medium enterprises and greater pressure to achieve targets for local GDP growth. Aiming to draw public attention to the problems arising from the reform, our study advocates necessary environmental regulations on business registration, which lends support to the theoretical view of "public interest" rather than "public choice". • Deregulation reform of business registration increases PM2.5 concentrations in China. • Treatment effects of deregulation reform on PM2.5 air pollution vary widely among regions. • More SME entries and higher targets for GDP growth are associated with stronger effects of deregulation reform on PM2.5. • PM2.5 air pollution should be considered during the deregulation reform in China and other developing economies. [ABSTRACT FROM AUTHOR]