Pollution liability insurance and corporate environmental compliance in China
研究深圳强制污染责任保险对电镀和电路板制造企业环境违规的影响，发现保险使年违规次数减少72%，但存在道德风险部分抵消合规收益。
Abstract This study examines the effect of a pollution liability insurance mandate on corporate environmental compliance in Shenzhen, China. We employ a triple differences design, comparing electroplating and circuit board (ECB) manufacturing firms, mandated to purchase insurance, to industries and a neighboring city without the mandate. Results show a 0.48 reduction in annual environmental violations per firm (a 72% decrease) across all Shenzhen ECB firms. Within the Shenzhen ECB industry, only about half of firms comply. Notably, both insured and uninsured firms reduced violations, consistent with anticipation that (eventual) premiums would depend on past violations. The insurance could generate two opposing forces: premium‐based incentives to reduce violations versus moral hazard among the insured. We find suggestive evidence that insured firms' environmental compliance gains are partially offset by moral hazard. Our findings demonstrate that premium‐based incentives dominate and effectively counteract market failures due to asymmetric information, increasing environmental compliance on net.