Design on China's Environmental Administrative System with the Context of the Externality Theory

The externality features of environmental problems determined that the problem can not be resolved only by the market system itself,and government intervention become the key way for such situation.The purpose for externality study is on its internalization,which can be expressed by modifying the market failure.This paper distinguishes the main bodies of environmental externality,establishes a classification model according to temporal and spatial principles,and develops conceptual functions of externality's value.Based on these studies,questions like which kinds of environmental problems need to be managed,who should take charge,and which kind of instruments should be taken,have been answered respectively.And then the environmental administrative system with three levels and each with two layers is deduced.The inter-district externalities should be governed by the upper level government.With a minimum total cost,the environmental externality should be internalized in a small area as much as possible because of its complete information,and the policy instruments are the combinations which comply with cost-effectiveness optimum principle.To internalize the inter-province and inter-city externalities,the sub-bureau of SEPA(State Environmental Protection Administration of China) and Provincial EPB(Environmental Protection Bureau) should be established.