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

Abstract

Green innovation is vital in transforming China’s economic development from high speed to high quality. Environmental regulation plays an important role in stimulating regional green innovation, and appropriate environmental decentralization is the institutional basis to consolidate the innovation compensation of environmental regulation. Clarifying the relationship among environmental regulation, environmental decentralization, and green innovation is of great theoretical and practical significance for regional environmental management and green innovation development. This paper incorporates environmental regulation, environmental decentralization, and regional green innovation into the same analytical framework and constructs a fixed-effects model and a threshold panel model to empirically examine the intrinsic relationship between them based on panel data of 30 Chinese provinces from 2006 to 2015. The estimation results indicate that environmental regulation has a positive impact on regional green innovation, which is greater in developed regions than in underdeveloped regions. Environmental decentralization plays a negative role in regional green innovation, with underdeveloped regions being affected to a greater extent. The impact of environmental regulation on regional green innovation shows a threshold characteristic with the change of the degree of environmental decentralization, while the green innovation utility of environmental regulation gradually decreases with the increase of the degree of environmental decentralization.

Can public participation promote regional green innovation?——Threshold effect of environmental regulation analysis

“…Referring to previous studies ( Lin and Zhu, 2019 ; Tang and Li, 2022 ), this study chooses the following variables as control variables. Level of economic development (PGDP) : Economic development is a key factor affecting regional green innovation.…”

Government environmental concerns and corporate green innovation: Evidence from heavy‐polluting enterprises in China

“…Within the framework of the Porter hypothesis, firms respond to external pressures from stakeholder requirements, and firms are also internally incentivized to cultivate a unique green competitive advantage. Thus, the catalytic effect of government environmental concerns on corporate green innovation is mainly reflected in external pressure from stakeholders, as well as internal motivational factors for firms (Ren & Ji, 2021; Tang & Li, 2022).…”

Promote Green Innovation in Manufacturing Enterprises in the Aspect of Government Subsidies in China

“…However, local firms have little incentive to undertake green innovation activities due to the externalities of environmental behavior [11][12][13]. On the one hand, local enterprises pay no cost for the extraction of natural resources; on the other hand, the benefits of environmental management and green innovation undertaken by local enterprises are shared by all economic parties, while the costs are borne alone [14]. Therefore, the key to incentivizing business participation in environmental governance is to internalize the problem of externalities, including charging companies for polluting and subsidizing them for cutting pollution [15,16].…”