Green Innovation Effect Of Environmental Policy

It is believed that the extensive industrial growth model of China has already led to substantial consumption of resources and ecological deterioration of the environment.To cope with this situation,the Chinese government contributes to green innovation in order to balance economic development with the desire to address numerous severe environmental problems.Existing literature indicates that green innovation is highly dependent on the driving of environmental policies.The "Porter Hypothesis" believes that a "properly designed" environmental policy may bestir corporations to innovate,and at the same time produce an "innovation offsets" effect,which builds the competitive advantage.However,relevant research has not reached consensus on how to meet the precondition of “properly designed”,the influence mechanism of environmental policy on green innovation is not clear.Since the "three historic changes" of environmental protection concept was put forward in2006,China's environmental policies have undergone important changes in policy concept and policy instruments.In terms of policy concepts,from passively responding to ecological and environmental issues,to actively promote environmentally-friendly and sustainable economic development models.Environmental policy has blended into more economic elements;in terms of policy instruments,it has shifted from government administrative intervention to the emphasis on the role of market incentives,encouraging public participation and social supervision.Since then,China has issued a wide and diverse mix of policy instruments to achieve the balanced development of the environment and economy,of which the circular economy development policy is the most typical.Based on the theories and literature related to environmental policy and green innovation,this dissertation studies the impact of environmental policy on green innovation through the selection policy of circular economy demonstration cities(counties),which is helpful to explore and summarize the coordinated development of environment and economy in the new period.The main research contents of this article are as follows:The first is the theoretical basis and literature review.After defining the concepts of environmental policy and green innovation,this dissertation systematically summarizes the theories of the "dual externalities" of green innovation,the "path dependence" effect of technological progress,and the "Porter Hypothesis" in order to show the necessity of environmental policy for green innovation,points out the shortcomings of existing research in terms of variable selection and research methods.Then,this dissertation systematically combs the development history of China's environmental protection,green innovation,and China's environmental administrative system since the founding of the People's Republic of China,summarizes the content and characteristics of China's main environmental policy instruments,and indicated the major problems of environmental policy design and green technology development.By summarizing,this dissertation finds that high-pressure policy,such as increasing policy goals and strengthening environmental accountability,may not guarantee the effective implementation of environmental policies.The "properly designed" environmental policy should truly mobilize local governments and enterprises' environmental protection enthusiasm and responsibility awareness by appropriate incentive conditions,and guide them shifting to clean production.From this standpoint,this article proposes the necessary conditions for the effective implementation of environmental policy effects among the central government,local governments and enterprises,and analyzes how the circular economy demonstration cities(counties)policy makes influence on green innovation.In the empirical analysis section,this article examines the impact of environmental policies on green technology innovation from two perspectives.The first is the impact on green technology output,that is,whether environmental policies promote the quantity and quality of green technology output.Using the panel data of China 's prefecture-level cities,the empirical study analyzes the effect of the circular economy demonstration city(county)policy,the cities' industrial structure,the external opening scale,the local financial support for research and R&D human capital intensity,on the quantity and quality of city's green technology output.In the heterogeneity analysis,this study analyzes the different policy effects on different research subjects(enterprises,colleges,research institutions,institutions and individuals),different regions(east,central,western)and different resource endowments(mature and decline resources)cities.The second is the impact on the tendency of green technology research and innovation,that is,whether environmental policies have increased the proportion of green technology output in all technology outputs.Using the economic data and patent data of China's listed companies,the empirical study analyzes the impact of the circular economy demonstration city(county)policy on the proportion of green technology innovation output and the relative quality of green innovation,examines whether the policy leads to the preference of green innovation.At the same time,this dissertation examines the impact of the stock of green patents and non-green patents on green innovation in order to test the "path-dependent" effect.In addition,this dissertation also examines the performance of the enterprise' profit after the implementation of the policy,to test the "innovation offsets" effect of the strong "Porter hypothesis".This study finds that:(1)A well-designed environmental policy can effectively promote green technology innovation,but market-based policy tools have not played a significant role due to the current high cost of green development,the policy's incentives for green innovation mainly rely on commend-and-control policy instrument;(2)Technological progress has a significant "path dependence" feature.Company with higher the number and quality of nongreen technology patents,is more likely to conduct non-green technology research,and environmental policies can break through "path dependence" effect and promote company's research direction shifting to green technology;(3)There is heterogeneity in the effects of environmental policies,the policy effect is more obvious for eastern regions with strong green technology development bases and decline-resource type cities;(4)Company's profits have also increased significantly after implementation of the policy,it is found that environmental policies could have an “innovation offsets” mechanism for corporate performance,but it is not the only mechanism.