This paper evaluates the effects of China's industrial SO2 emissions trading pilot scheme (SETPS) on the pollution abatement costs (PAC) from the past and future perspective. We apply the kernel-based propensity score difference-in-difference method to examine the effects of SETPS on the average pollution abatement costs (APAC) and the marginal pollution abatement costs (MPAC) based on the environment data from the industrial sector of 29 provinces in China over the period of 1998 to 2011. Our findings are that SETPS failed to reduce PAC as a w...