Innovation, Environmental Regulation And Policy Instrument Selection In Shandong Province

Environmental policy aims to inspire enterprises to reduce pollution emissions. Rational enterprises will minimize the cost of pollution to obey government policy. In order to maintain production profits and reduce pollution emissions, installation of abatement equipment and development of emission reduction technologies become enterprises’important choice. Therefore, whether it can encourage enterprises’ technological innovation and achieve both economical growth and environmental clean becomes an important indicator of valid environmental policy instruments.In recent years, environmental protection departments of Shandong Province made increasingly stringent environmental policies to control the increasingly serious pollution. These environmental policies have achieved certain results in limiting industrial pollution emissions. Research on whether environmental policies are effective in promoting technological innovation of enterprises to achieve benign coordination of regional economic,technological progress and ecological environment has become an important issue.In order to encourage technological, economists’study of environmental policy are divided into two parts:first, a strong environmental regulation is effective in promoting technological innovation of enterprises; Second, how to choose environmental policy instrument to encourage enterprise’technology innovation.Based on the research results of domestic and foreign scholars on environmental policy and technological innovation incentives, we employ a combination of theoretical and empirical,qualitative and quantitative research methods and analyze the following four parts:First,we overview the current status of the environmental system and the implementation of environmental policy instruments in Shandong Province.Second, we make empirical analysis on technological innovation incentives of environmental policy in Shandong Province.We use datas of subdivision city in Shandong Province from1991to2012.Fixed-effects panel regression analysis demonstrates that increasingly stringent environmental policies do promote the enterprises’technical innovation in Shandong Province, but innovation effect differs between different cities. Third,we analyze technological innovation incentives in Shandong Province from the theoretical view. We include micro-enterprises’ innovation behavior driven by the purpose of profits maximization in the analysis framework. We construct enterprises’cost curve under four kinds of environmental policy instruments,drawing on analysis of domestic and foreign economists’welfare economics.We combine specific problems in Shandong Province and put forward to the following conclusions:under the principle of stimulating enterprises’ technological innovation, the optimal environmental policy is Tradable Permit, followed by Emission Fee(Tax) and Environmental Subsidy, the worst is Emission Quota. We also use cross-industry datas in2012and construct multiple choice model to make comparison and sorting of four environmental policy instruments:Emission Quota, Emission Fee(Tax),Environmental Subsidy and Tradable Permit. Finally,we make a series of policy recommendations,including a stable environment control standards,reformation from Emission Fee to Emission Tax and improvement of Tradable Permit Market.