Honghao Zheng

I examine the effects of downstream buyer power from coal-fired power plants on the organization of production in the upstream coal mining industry in China. I estimate a structural model of coal mines featuring (i) joint production of coal and worker safety and (ii) endogenous safety choices and factor-augmenting productivity. To identify the causal effects of buyer power on coal mining outcomes, I employ a shift-share instrumental variable, leveraging exogenous variations stemming from a restructuring of the electricity sector. I find an unintended but life-and-death consequence associated with market power—buyer power exposure leads to higher provincial death rates, also corroborated by lower safety-coal output ratios at the mine level. The underlying mechanism is that exposure to buyer power prompts coal mines to shift toward less capital-intensive, more traditional, and less safe mining technologies, leading to higher death rates. Finally, back-of-the-envelope calculations suggest that the decline in buyer power due to the electricity sector restructuring explains 53% of the improvement in coal mining death rates. The findings provide a new perspective on understanding the shared experience of high mining death rates in developed and developing countries over different historical periods.

We evaluate the effectiveness of the carbon emission trading scheme (ETS) pilots that China established in 2013-2014. The coexistence of two types of emissions regulation within a single energy market—with either an absolute or an intensity cap—provides a unique opportunity to study their differential effects. We employ a difference-in-differences estimation strategy at several units of analysis—provinces, industrial firms, and power plants—to examine the effects on several margins of adjustment, including energy consumption, industrial output, the energy input mix, electricity trade, and substitution between power generation sources. Both types of regulation induce carbon mitigation, but they come with distinct tradeoffs.

We examine the role of management practices as an underlying mechanism to increase establishment-level productivity under reduced import competition due to an industrial policy in the German coal mining industry. The policy forced the downstream German steel sector to buy coal and coke exclusively from domestic coal mines, effectively reducing import competition and ensuring stable demand for coal mines with coking plants. We employ a difference-in-differences empirical strategy to track coal mines with heterogeneous shock exposure by exploiting exogenous variation in coal mines' suitability in coke production. We show that the policy increased quantity-based productivity (TFPQ) by around 6% and decreased marginal costs by 5%. Also, the vertically integrated cokeries improve TFPQ by around 20%. However, the anti-competitive effect of the industrial policy led coal mines to raise markups instead of completely passing on the efficiency gains to consumers. Using rich employer-employee-matched data on managers, we show that management practices to reduce demand uncertainty and promote mechanization were essential in explaining these efficiency gains under reduced import competition.

This paper uses data on Chinese manufacturing firms to evaluate the link between financial constraints, export market entry and productive efficiency. We show, first, that many small firms operate below minimum efficient scale at a point with increasing returns to scale and, second, that small firms selling only domestically extend the most trade credit to their clients, even though they are most financially constrained themselves. Entering the export market provides a way to expand output and reduce trade credit by taking advantage of more favorable contracting institutions and payment terms available only for exports. Firms with a higher outstanding balance of trade credit and with a more adverse institutional environment expand output most when they start exporting. It allows them to exploit scale economies and improve productivity. Our findings highlight trade credit as a previously overlooked mechanism behind the distribution of firm sizes and provide new insights into the learning-by-exporting literature.

We study the consequences of market power on both consumer surplus and environmental benefits in China's cement industry, where collusive producer behavior is frequently alleged. We develop a structural framework combining demand and production approaches to identify unobserved conduct. Using the estimated structural parameters, we quantify the unintended environmental benefits of collusion and design corresponding environmental policies conditional on different objective functions of the government.

We use unique data on solar power installation and generation across China to study and understand the subsidized entry of renewable power facilities from an industrial policy perspective. The production subsidy for solar power generation differs across regions with different solar potentials and declines unevenly over time, leading to heterogeneous incentives for solar power entry. In this paper, we ask how to maximize solar power entry while minimizing public subsidy expenses. The findings provide a new perspective on industrial policy related to solar power adoption and energy transition.

We estimate the impact of credit access on labor market power considering capital-skill complementarity, by investigating an intangible collateral reform in Norway. We take advantage of a wide range of novel Norwegian data regarding household tax returns, employer-employee relationships, firm-bank loan information, and firm balance sheets, along with a production function approach, to estimate heterogeneous labor market power over high- and low-skilled labor. The idea is to understand how imperfections in capital and labor input markets are related.