The results for our first inquiry suggest that the system of pollution levies works. The levies decrease the production of environmental effluents. Furthermore, increasing the levies would reinforce their favorable impact. For the second question, we will find no evidence that the levies alter production efficiency for most classes of mills. [This observation is similar to US experience (Jaffe et al. (1995))]. Yet we will also observe ample remaining opportunity to increase efficiency through improved labor productivity. This second observation is consistent with the government’s recent decision to allow mills to release surplus labor. In addition, our regressions indicate that.
