The Impact of Heterogeneous Environmental Regulations on Location Choices of Pollution-Intensive Firms in China

Abstract

The spatial transfer pattern and dynamic mechanisms of pollution-intensive industries are key issues for national and regional sustainable development. Although previous studies have emphasized the impact of environmental regulations on the transfer of pollution industries, there is a lack of firm-level analysis of the combined effects of different types of environmental regulations and other factors on them, which has led to the pollution haven hypothesis remaining contested. In order to provide micro evidence to test the pollution haven hypothesis, this paper reveals the temporal and spatial evolution of pollution-intensive foreign firms’ distribution in China, and explores the impact of heterogeneous environmental regulations on the location choices by using spatial analysis and zero-inflated negative binomial regression. The empirical results were as follows: Firstly, pollution-intensive foreign firms were highly concentrated in the eastern developed region and have a strong path dependency in China. Secondly, environmental regulations, especially the market-based environmental regulation, had a significant negative impact on the location choices of pollution-intensive foreign firms. Thirdly, the spatial distribution of pollution-intensive foreign firms was strongly influenced by new economic and geographic factors. Fourthly, pollution-intensive foreign firms have a significant pollution border effects in developed regions but not in economically less-developed regions due to transportation costs. The governments are expected to adopt heterogeneous environmental regulations based on the level of regional economic development to avoid the pollution haven phenomenon, thus achieving a sustainable development.

Can the Natural Resources Capitalization Contribute to the Achievement of Carbon Neutrality? A Pilot Experiment Evidence From China

“…The differentiated results among the four pilot cities may be due to their heterogeneous regional characteristics (Yu and Tsai, 2018;Tang and Dou, 2021). Compared with the other three cities, Yan'an has the lowest scale of the secondary industry, with only 18.0, 10.8 and 17.7% of the secondary industry's output value in Hunlun Buir, Huzhou and Loudi averagely from 2015 to 2017, this weakened its emission-reducing potential because the manufacturing industry is the main source of CO 2 emission.…”

Spatial Spillover Effect of Pollution under Heterogeneous Environmental Regulations in the Perspective of Hidden Economy

“…There is a debate between the "Porter hypothesis" and the "constraint hypothesis" regarding how environmental regulation affects technological innovation [8]. With the "constraint hypothesis", Huang and Ma [9] used the variable coefficient and mediating effects models to find that environmental regulations in growing resource cities were not conducive to technological upgrading. Some scholars based on the "Porter hypothesis" have argued that strong environmental regulation could improve their market competitiveness by promoting enterprises' technological innovation while reducing environmental damage [10][11][12].…”

Research of the Impact of Heterogeneous Environmental Regulation on the Performance of China’s Manufacturing Enterprises

“…Environmental regulation refers to relevant laws and regulations that have been formulated by the government and local regulatory authorities to protect the ecological environment and achieve sustainable economic development (Chai et al, 2020;Lei et al, 2021;Tang and Dou, 2021;Gao et al, 2022). Generally, China's environmental regulations are divided into formal and informal environmental regulation.…”

“…First, most of the previous studies focused on the role of a single environmental regulation tool. Although some studies have discussed the impact of heterogeneous environmental regulation on the location choices of pollution-intensive firms (Tang and Dou, 2021), only a few studies have directly examined the economic effects of heterogeneous environmental regulation on firms. Second, these reviewed studies have not yet determined that technological innovation has played the mediating function between environmental regulations and manufacturing enterprise performance.…”