Acquiring air quality monitoring data through the hierarchy or the market : A case study of Shandong province, China

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Article number138089
Journal / PublicationScience of the Total Environment
Online published20 Mar 2020
Publication statusPublished - 25 Jun 2020


This article investigates the principal-agent problem in acquiring air quality monitoring data through the government hierarchy in China and uses Shandong as a case study for illustrating how it is addressed by resorting to a market approach. Adopting transaction cost economics perspective, we analyzed contractual hazards in both relying on the hierarchy and the market. We found the Shandong provincial environmental protection bureau has specified eligibility criteria and crafted contract terms that can reduce the risk of being held up resulted from asset specificity, increase efficiency, improve observability of both input and output quality, and induce accountability by enforceable rewards and sanctions. The lessons learned contribute to the literature on multi-level environmental governance and are useful for institution building for achieving sustainable development in China and beyond.

Research Area(s)

  • Air pollution, China, Contractual hazards, Institution building, Multi-level environmental governance