Industrial Energy Regulation: The Role of Business Conglomerates in China

This paper characterizes the importance of ownership networks of firms that are subject to a prominent energy regulation in China: the Top 1000 Enterprises Energy-Saving Program. We use data on the activities of regulated and unregulated firms that are part of the same conglomerate to study the overall importance of conglomerates as well as their geographic concentration. Accounting for business networks of regulated firms significantly increases the fraction of output that is affected by the regulation. We also document that most related firms of Top 1000 firms are located in the same province.