The Study On The Influence Of Environmental Regulation On Clean Technological Innovation In China

Recently, the greenhouse effect, PM2.5, haze and other pollution problemsfrequently appear in people’s lives, forcing people to pay attention to and controlenvironmental pollution in time. According to the assumption of rational man,whether consumers or producers are not willing to initiatively take the cost forenvironmental resources which are public goods. It only relies on the governmentcompulsory measures to protect the environment. The traditional view is thatenvironmental regulation would increase government spending and production costs,reduce the competitiveness of enterprises and economic growth rate."Porterhypothesis" points that appropriate environmental regulation intensity can stimulateenterprises to implement technical innovation under the dynamic decision-makingsystem, achieve environmental protection while increasing the competitiveness ofenterprises. After the "Porter hypothesis" proposed, frontier literature on therelationship between environmental regulation and technological innovation havebeen studied, but main researches have been focused on testing the impact ofenvironmental regulation on the overall technological innovation and enterpriseproductivity and few literature has researched about the influence of environmentalregulation on clean technological innovation. Therefore, this paper deeply studies onthe influence of environmental regulation on clean technological innovation frommathematical analysis and empirical verification.First, a two-stage model of production is established, and then, pollution taxesand environmental subsidies are introduced in the model. Mathematical models arederived to get the relationship between environmental regulation intensity and clean technological innovation. It shows that innovation only directs technical changetowards production technologies as the absence of environmental regulation. Whenenvironmental regulation is up to the certain intensity and among the intensity range,clean technical innovation and production technical innovation occur simultaneously.When environmental regulation intensity exceeds a certain level, innovation occursonly in the direction of clean technologies. Then, China provincial panel data from2003to2011are used to check the relationship between environmental regulation andclean technological innovation. In the empirical analysis, the effect of internalizedenvironmental regulation and exogenous environmental regulation on cleantechnological innovation have been considered, and the delayed impact ofenvironmental regulation and the differences impact of regional developmentimbalances have been taken into account as well.According to empirical results and analysis, conclusions and relevant policyrecommendations are made. There is an inverted U-shaped relationship betweenenvironmental regulation on enterprises and clean technological innovation. Thisrelationship is significant in the eastern and central regions, and is not significant inthe western region. Currently, China’s environmental regulation intensity is on therising phase of the inverted U-shaped. An appropriate increase in the intensity ofenvironmental regulation can improve the ability of clean technological innovation.Different types of environmental regulation have different impacts on the manner andextent of clean technical innovation. Overall, internalize environmental regulation isbetter than the exogenous environmental regulation. Even so, targeted environmentalregulation measures should be selected in different regions based on their own actualsituation.