1 China’s provincial industrial pollution: the role of technical efficiency, pollution levy, and pollution quantity control YANHONG JIN, Corresponding author 1 Department of Agricultural, Food and Resource Economics, Rutgers University, New Brunswick, NJ 08850, USA. Tel. 848-932-9139. Email: yjin@aesop.rutgers.edu LIGUO LIN School of Economics and Institute for Advanced Research, Key Laboratory of Mathematical Economics (SUFE) of Ministry of Education, University of Finance and Economics, Shanghai, 200433, China. Email: Lin.liguo@mail.shufe.edu.cn Liguo Lin wishes to acknowledge the support from the Leading Academic Discipline Program (211 Project for Shanghai University of Finance and Economics) and the Innovation Program of Shanghai Municipal Education Commission. Submitted 11 May 2012; revised 4 August 2013; accepted 3 September 2013 Abstract Using China’s provincial economic and pollution data from 1992 to 2008, we employ data envelope analysis (DEA) and econometric analyses to explicitly estimate technical efficiency and examine the role of technical efficiency, pollution control instruments (pollution levy and pollution quantity control), and prices of production inputs on pollution intensity. We find that an increase of labor wage and/or a decrease of capital cost are associated with an improvement in technical efficiency. The levy rates of air pollution improve technical efficiency but pollution quantity control targets have no statistically significant effect on technical efficiency. On the other hand, technical efficiency, the effective levy rates, pollution quantity control targets, and capital cost have a negative effect but wage has a positive effect on pollution intensity. The importance of production input prices in pollution intensity and technical efficiency suggests alternative channels for industrial pollution control as well as cautions for the unintended consequence on the environment if any policy changes are made relating to labor and capital costs. Key words: pollution control, levy, technical efficiency, total quantity control, China 1 Seniority of authorship is equally shared.