Informed Enforcement: Lessons from Pollution Monitoring in China

Abstract

Government regulations are often imperfectly enforced by public officials. In this study, we investigate if real-time monitoring of policy outcomes can improve enforcement of existing regulations by exploring the introduction of air pollution monitors in China. Exploiting assignment criteria established by the central government and new geo-referenced data on local enforcement activities, we show that monitoring: 1) increases enforcement against local firms, 2) improves the targeting of enforcement, and 3) reduces aggregate pollution. These effects are driven by officials facing performance incentives and are stronger when there is limited scope for data manipulation, suggesting that real-time monitoring improves top-down accountability.