Environmental Regulation, Government Subsidies, and Green Technology Innovation—A Provincial Panel Data Analysis from China

Abstract

Economic development in the “new era” will require green innovation. To encourage the growth of green technology innovation, it has become fashionable to strengthen environmental regulation. However, the impact of environmental regulation on green technology innovation, as well as the role of government subsidies, needs to be examined. Utilizing fixed-effect models and 2SLS models to explore the impact of environmental regulation on green technology innovation in China from 2003 to 2017, this research sought to examine whether environmental regulations impact green technology innovation, as well as the role of government subsidies in the above-mentioned influence path. The findings support the Porter Hypothesis by demonstrating an inverted “U” relationship between environmental regulation and green technology innovation. The impact of environmental regulation on green technology innovation varies by region. To be specific, there is an inverted “U” relationship between environmental regulation and green technology innovation in China’s central and central coast regions. In comparison, the north area, southern coast, and southwest region exhibit a “U” relationship between the two. The relationship is not significant in the Beijing-Tianjin region. Additionally, government subsidies act as an intermediate in this process, positively influencing firms to pursue green technology innovation during the earliest stages of environmental regulation strengthening. However, government subsidies above a certain level are unproductive and should be used appropriately and phased off in due course.

The Impact of Environmental Regulation on Green Energy Technology Innovation—Evidence from China

“…It shows that there is a significant inverted U-shaped relationship between environmental regulation and GETI. This is consistent with the results of Shang et al [44] and Wang et al [74]. The possible explanation is that in the early stage, stronger regulation not only increases the cost of compliance, but also reduces the effectiveness of traditional terminal governance measures [17].…”

How Do Environmental Regulation and Environmental Decentralization Affect Regional Green Innovation? Empirical Research from China

“…The “disincentive theory”, based on neoclassical economics, states that increasing the environmental regulation intensity will lead to an increase in the pollution control cost for producers, resulting in their reduction on green innovation inputs, thus inhibiting the development of regional green innovation [ 28 , 29 ]. In addition, some scholars have also suggested that the green innovation effect of environmental regulation has non-linear characteristics [ 30 , 31 , 32 ], which are influenced by factors such as government subsidies [ 33 ], R&D investment [ 34 ], industrial structure [ 35 ], and foreign investment [ 36 ].…”

Digital Economy, Environmental Regulation, and Ecological Well-Being Performance: A Provincial Panel Data Analysis from China

“…The spatial Durbin model incorporates the spatial effects of dependent and independent variables at the same time, which can effectively avoid omitting some spatial effects in the spatial error model or the spatial lag model, resulting in errors in the estimation results [ 51 ]. Drawing on the studies of Fang et al (2019) [ 32 ] and Wang et al (2021) [ 52 ], this paper analyzes the direct, indirect, and spatial spillover effects of the digital economy on ecological well-being performance and identifies the important role of environmental regulation through the intermediary and spatial models. The research methodology, evaluation index system, and data sources are as follows.…”