Technical efficiency estimation of China’s environmental protection enterprises and its heterogeneity

The status of technical efficiency (TE) of environmental protection enterprises is crucial to the sustainable economic development. Based on the micro-survey data of China’s environmental protection enterprises from 2003 to 2013, through a systematic calculation and comparison about TE level under stochastic frontier analysis, this article investigated the distribution characteristics and heterogeneous sources of them comprehensively and found that first, there are wide-ranging technical efficiency differences among sub-sectors, ownership, and regions within China’s environmental protection industry, and this type of heterogeneity was significantly interfered by the institution and policy environment. Second, there is obvious scale economy effect and no scope economy effect in the TE distribution of China’s environmental protection enterprises, and their TE level has a positive response to management improvement and competition enhancement, but has a negative feedback on heavy asset expansion and debt-driven growth mode. Third, the overall TE levels of non-state-owned enterprises are higher than that of state-owned enterprises; the overall TE levels of enterprises located in the eastern provinces are higher than those of enterprises located in the central and western provinces. Fourth, reducing tax burdens of environmental protection enterprises is more effective to promote their TE level than providing governmental subsidies directly. Therefore, to promote the quality of the development for China’s environmental protection industry, it is necessary to emphasize the market mechanism. Based on the market power, we should accelerate the industry integration, cultivate the market demand, and promote market competition. Furthermore, the government should also need to design a targeted support system and differentiated policy arrangements for the development of environmental protection enterprises.