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Key findings

Executive Summary

This paper estimates the effect of environmental regulation on firm productivity using a spatial regression discontinuity design implicit in China’s water quality monitoring system. Because water quality readings are important for political evaluations, and the monitoring stations only capture emissions from their upstream regions, local government officials are incentivized to enforce tighter environmental standards on firms immediately upstream of a monitoring station, rather  than  those  immediately  downstream.

Smallholder farmers often face prohibitive transaction costs in agricultural commodity markets in developing countries. Consequently, they are only partly integrated into these markets.