3.2. Theory extension
Institutional analysis is absent under technical perspective,
which may resort to technology to monitor discharge, or organizational
behavior perspective, which focus on management level.
Institutional compatibility analysis can extend the theory by overcoming
these shortcomings. Based on the above analysis, we put
forward the causal chain model on the causality of generation of
industrial pollution, as Fig. 1 shows. The model is a theoretical
breakthrough, reflecting deeper causality.
Regulation in China is basically a hierarchical model involving
central government, local government and company. Local governments
would rather chase GDP increase and local interests than
enforce strict regulation on local companies. Partial failure of the
local administration goes with distortion or concealing of information
related with environmental scandals. Information asymmetry
and information distortion will seriously affect the quality of
decision-making. Lack of pressure from higher authority makes it
difficult for bureaucrats to ensure the effectiveness and efficiency of
supervision and surveillance.