Environmental Regulation,Local Government Competition And Enterprise Green Innovation

To promote green development and ecological improvement,China has conducted rich practices in environmental governance,achieving fruitful results while also producing some urgent problems to be solved.The strengthening of environmental regulation also inevitably means that economic growth faces greater external constraints.The successful transformation and leapfrog development of polluting enterprises lies in green innovation.However,there is still no consensus on whether environmental regulations can promote green innovation in businesses,and the impact of the government as the main driver of environmental regulations on their effectiveness is also debatable.Therefore,this thesis focuses on the reality of China’s environmental regulatory practice,explores the response of Chinese enterprises to the strengthening of environmental rule of law,and examines the effect of environmental policies,based on empirical research on the impact of environmental regulations on green innovation in enterprises,while investigating the moderating effect of local government competition.Through this,the factors influencing the effectiveness of environmental regulations can be elucidated,providing theoretical and empirical support for the optimization of environmental governance practices in China.The thesis leverages the quasi-natural experiment provided by the implementation of China’s New Environmental Protection Law(i.e.,NEPL)in 2015.Using patent data from Ashare listed companies spanning the period from 2010 to 2019,a Difference-in-Differences(DID)model is constructed to investigate the impact of the NEPL’s implementation on the green innovation of enterprises.The study also examines the dynamic policy effects of the policy and conducts a series of robustness tests on the benchmark regression,such as the placebo test,the re-measurement of core variables,and the exclusion of other policy factors;In addition,this study uses group regression to analyze the heterogeneity from the two dimensions of enterprise nature and regional characteristics,and explore the impact of differences in enterprise ownership and scale,regional political and business relations,and public participation in environmental protection on policy effects;Furthermore,the mechanism test models are constructed to empirically test the two major mechanisms of financing constraints and environmental investment;Finally,a moderation effects model is constructed to empirically study the regulatory role of local government fiscal competition and investment attraction competition on the impact of new law implementation on enterprise green innovation.The empirical results show that,first,the implementation of NEPL has an overall inhibitory effect on the green innovation of heavily polluting enterprises,but this effect gradually weakens over time,and in the long run,it promotes the improvement of the green innovation level of heavily polluting enterprises,confirming the short-term environmental regulatory effect dominated by "compliance costs" and the long-term existence of "innovation compensation".Second,heterogeneity analysis shows that the impact of the new law on the green innovation of heavily polluting enterprises varies among different firms and regions,and the policy’s inhibitory effect is more profound in non-state-owned and small enterprises,and more evident in regions with higher levels of political integrity and public participation in environmental protection.Third,the mechanism analysis shows that the implementation of the new law significantly increases the financing constraints of heavily polluting enterprises,and the level of environmental investment is significantly increased,leading to a crowding-out effect on their green innovation.Finally,local government fiscal and investment attraction competition alleviates the environmental governance pressure on enterprises,and to a certain extent,weakens the "compliance cost" effect of the new law implementation on enterprise green innovation.Based on the conclusions of the aforementioned studies,this thesis proposes the following recommendations: to accelerate the establishment and improvement of a market-oriented environmental regulation system;to fully consider the differences among enterprises and regions in environmental policy formulation;to cultivate new types of government-business relationships to promote fair and impartial environmental law enforcement;to fully leverage the participation of social forces in environmental governance;to provide financial support and resources for green innovation;and to balance the economic and ecological benefits in local government competition.