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Background: The Resource Tax Law has been officially implemented on September 1, 2020 in China. This law presents the "Fee-to-Tax" reform of water resources. Methods: This article compares the effects of the "Fee-to-Tax" reform under an asymmetric duopoly with perfect information. Results: First, an analysis when all firms simultaneously respond to the water resource policy is conducted. The mechanisms of the two policies are different: the water resource fee affects output by reducing marketdoi:10.21203/rs.3.rs-306845/v1 fatcat:jg2lenqa2nhiznwjgq7gtz35sa