The Influence Research Of Environmental Regulation On Total Factor Productivity:Reexamination Of Potter's Hypothesis

In the process of China's economic growth,the resource and environmental issues become increasingly emerged:the number of annual haze days increased significantly and showed regional diffusion in recent years;A significant increase in the frequency,intensity and scope of extreme weather made the economic losses expand gradually during the past 60 years.It is China's economic problems to be solved immediately to establish a more effective system of environmental protection and promote the implementation of environmental regulations to accelerate the green transition.However,whether the environmental regulation to be strengthened continully can effectively address this issue is doubtful.Neoclassical theorists believe that the costs of environmental regulation incurred on production of"crowding out" inhibiting technological innovation is bound to affect production efficiency;But Harvard business School's Professor Porter believes that:strict and appropriate environmental regulations can also stimulate technological innovation of enterprises and through the "innovative compensating effect" and "learning effect" to promote enterprise competitiveness and to achieve economic development and environmental protection"win-win" finally,although it will bring additional business costs,which is named "Porter hypothesis".Our concern is whether the "Porter hypothesis" is applicable in China in the early 21st century,if so,what is suitable conditions?Hence,this paper carried out the following research to verify and improve the Porter Hypothesis.First,Based on the SBM directional distance function and Malmquist-Luenberger Index,The paper estimates the total factor productivity at China's provincial level from 2003 to 2011 and analyse the effect mechanism of market-type environmental regulation on total factor productivity with the help of the panel model.The impact of environmental regulation on total factor productivity is different due to different types of environmental regulation,The paper makes market-type regulation as the core variables to study.It finds that:(1)With the market-type environmental regulation to be strengthend,total factor productivity will increase,however,to a certain extent,this effect will gradually to be weaken,namely,environmental regulation and total factor productivity inverted an U-type relationship.(2)Strict and proper market-type environmental regulation can stimulate technological innovation,improve productivity,realize the "win-win" between environmental quality improvement and productivity,and thus verify the "strong" Potter hypothesis.(3)Use different environmental regulation variables,and make the environmental investigators as the instrumental variables of the intensity of environmental regulation to overcome the endogeneity problem caused by reverse causality,The command-control environmental regulation is robust,which verifies the conclusion above,but the effect is weaker than the market-type regulation;Public participation in environmental regulation has not been revealed.Secondly,Combining the data of environmental regulation and micro-level of China's industrial enterprises at the provincial level,the paper makes the empirical test of the impact of environmental regulation intensity on total factor productivity in China and its mechanis.The study on large sample finds that:(1)An inverted U-shaped relationship between the area intensity of environmental regulation and enterprises' total factor productivity.Namely,with the improvement of environmental regulation intensity,TFP will gradually improve,but the environmental regulation intensity incresed to a certain degree,enterprise's total factor productivity will decline.The study further finds that the appropriate environmental regulation intensity can stimulate the "innovation compensation effect",which can make up for the cost of innovation and improve the total factor productivity of enterprises.(2)Using different environmental regulation intensity indicators to carry out robust test,and make the number of environmental protection as a tool to regulate the intensity of environmental variables to overcome the possible problems of endogenous.The research results show that the implementation of strict and appropriate environmental regulation can achieve the"win-win" results of environmental protection and productivity improvement.The two studies above from the medium data to the micro level confirms the "strong" Potter hypothesis by different methods and perspectives.Thirdly,The paper continues to examine the impact of environmental regulation on enterprise technological innovation at the micro-level,and focus on when the "Potter hypothesis" is suitable.The Study found that the intensity of environmental regulation and technological innovation of enterprises exist an U-shaped relationship from 2001 to 2007 overall.That is,initial weak environmental regulation intensity does reduce the enterprise technology innovation,but with improvement of environmental regulation strength,enterprise technology innovation will gradually increase,confirming the "weak" Porter hypothesis.But environmental regulation intensity significantly promotes the technological innovation of the enterprise just after 2006(in this year)and is significantly promotes the non state-owned enterprises and high-polluting industry,namely,Only When under the condition of the appropriate intensity of environmental regulation and geting effective implementation,and The enterprises making the active strategy on environmental protection,can the environmental regulation promotes enterprises' technological innovation.Several sub-study above use the micro-level data and provincial-level data respectively to explore the impact of environmental regulation on the business performance(TFP),confirming the Porter hypothesis.The provincial-level data estimates green total factor productivity considering the undesirable outputs,and the micro-data is used in the calculation method of the total factor productivity measurement also taking full account of the model of reverse causality and selective bias caused by the endogeneity problem.Our study confirmed the "Porter Hypothesis" in China,and only in the condition of "rational design" and geting the effective implementation of environmental regulation,can "Porter Hypothesis" be vertified.