IDEAS home Printed from https://ideas.repec.org/a/bla/growch/v52y2021i3p1701-1731.html
   My bibliography  Save this article

Agglomeration externalities and the non‐linear performance of environmental regulation: Evidence from China

Author

Listed:
  • Rui Pang
  • Dan Zheng
  • Minjun Shi

Abstract

The pollution abatement effect of environmental regulation changes periodically in terms of local economic agglomeration levels, because of agglomeration externalities could influence firms' regulatory response by changing the compliance cost. Based on a panel dataset of 30 provinces in China from 1999 to 2017, this paper engages in threshold model and mediation analysis to examine the thresholds of economic agglomeration for environmental regulation to take effect and the influencing paths of environmental regulation at different agglomeration levels. The economic agglomeration degree is measured by the economic density of the built‐up area. The threshold test recognizes two thresholds of economic density, which are 0.3 CNY billion/km2 and 1.7 CNY/km2. Only when economic density exceeds the thresholds, can environmental regulation significantly reduce industrial emission intensity and emission density, respectively. At the first threshold, environmental regulation takes effect mainly through improving local industrial structure; at the second threshold, environmental regulation takes effect mainly through downsizing the scale of polluting industries. The policy enlightenment provided by this article is to formulate differentiated environmental governance strategies according to local conditions and the characteristics of the development stage of each region.

Suggested Citation

  • Rui Pang & Dan Zheng & Minjun Shi, 2021. "Agglomeration externalities and the non‐linear performance of environmental regulation: Evidence from China," Growth and Change, Wiley Blackwell, vol. 52(3), pages 1701-1731, September.
  • Handle: RePEc:bla:growch:v:52:y:2021:i:3:p:1701-1731
    DOI: 10.1111/grow.12518
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/grow.12518
    Download Restriction: no

    File URL: https://libkey.io/10.1111/grow.12518?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Schreifels, Jeremy J. & Fu, Yale & Wilson, Elizabeth J., 2012. "Sulfur dioxide control in China: policy evolution during the 10th and 11th Five-year Plans and lessons for the future," Energy Policy, Elsevier, vol. 48(C), pages 779-789.
    2. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    3. Zheng, Dan & Shi, Minjun, 2018. "Industrial land policy, firm heterogeneity and firm location choice: Evidence from China," Land Use Policy, Elsevier, vol. 76(C), pages 58-67.
    4. Xiang Cao & Ping Wang & Bangzhu Zhu, 2018. "Has foreign direct investment increased air pollution in China? A hierarchical linear model approach," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 91(2), pages 659-669, March.
    5. Qunyong Wang, 2015. "Fixed-effect panel threshold model using Stata," Stata Journal, StataCorp LP, vol. 15(1), pages 121-134, March.
    6. He, Jie & Wang, Hua, 2012. "Economic structure, development policy and environmental quality: An empirical analysis of environmental Kuznets curves with Chinese municipal data," Ecological Economics, Elsevier, vol. 76(C), pages 49-59.
    7. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    8. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    9. Hua Wang & Nlandu Mamingi & Benoit Laplante & Susmita Dasgupta, 2003. "Incomplete Enforcement of Pollution Regulation: Bargaining Power of Chinese Factories," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(3), pages 245-262, March.
    10. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    11. World Bank, 2009. "Geography in Motion: World Development Report 2009 (excerpt)," Transnational Corporations Review, Ottawa United Learning Academy, vol. 1(3), pages 40-46, September.
    12. Huaming Zhang & Zhishuang Zhu & Yingjun Fan, 2018. "The impact of environmental regulation on the coordinated development of environment and economy in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 91(2), pages 473-489, March.
    13. LaFountain, Courtney, 2005. "Where do firms locate? Testing competing models of agglomeration," Journal of Urban Economics, Elsevier, vol. 58(2), pages 338-366, September.
    14. repec:hoo:wpaper:e-93-6 is not listed on IDEAS
    15. Lee, Sanghoon & Oh, Dae-Won, 2015. "Economic growth and the environment in China: Empirical evidence using prefecture level data," China Economic Review, Elsevier, vol. 36(C), pages 73-85.
    16. Ulrich Wagner & Christopher Timmins, 2009. "Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 231-256, June.
    17. Stern, David I., 2002. "Explaining changes in global sulfur emissions: an econometric decomposition approach," Ecological Economics, Elsevier, vol. 42(1-2), pages 201-220, August.
    18. He, Qichun, 2015. "Fiscal decentralization and environmental pollution: Evidence from Chinese panel data," China Economic Review, Elsevier, vol. 36(C), pages 86-100.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guanghui Tian & Jianming Miao & Changhong Miao & Yehua Dennis Wei & Dongyang Yang, 2022. "Interplay of Environmental Regulation and Local Protectionism in China," IJERPH, MDPI, vol. 19(10), pages 1-21, May.
    2. Mitch Kunce, 2022. "Decentralized Environmental Regulation with Agglomeration Forces," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 11(1), pages 1-2.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antoine Dechezleprêtre & Misato Sato, 2017. "The Impacts of Environmental Regulations on Competitiveness," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 183-206.
    2. Wu, Haitao & Hao, Yu & Ren, Siyu, 2020. "How do environmental regulation and environmental decentralization affect green total factor energy efficiency: Evidence from China," Energy Economics, Elsevier, vol. 91(C).
    3. He, Yiqing & Ding, Xin & Yang, Chuchu, 2021. "Do environmental regulations and financial constraints stimulate corporate technological innovation? Evidence from China," Journal of Asian Economics, Elsevier, vol. 72(C).
    4. Shu Kedong & Lu Yueyu & Yu Ziyan & Kuai Peng & Zhang Shu’an, 2021. "Influences of environmental regulations on skill premium: mediating effect of industrial structure optimization," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 245-273, April.
    5. Tan, Jing & Liu, Tianyi & Xu, Hao, 2024. "The environmental and economic consequences of environmental centralization: Evidence from China's environmental vertical management reform," China Economic Review, Elsevier, vol. 84(C).
    6. Shufen Guo & Ludi Wen & Yanrui Wu & Xiaohang Yue & Guilian Fan, 2020. "Fiscal Decentralization and Local Environmental Pollution in China," IJERPH, MDPI, vol. 17(22), pages 1-17, November.
    7. Shuai Chen & Faqin Lin & Xi Yao & Peng Zhang, 2020. "WTO accession, trade expansion, and air pollution: Evidence from China’s county‐level panel data," Review of International Economics, Wiley Blackwell, vol. 28(4), pages 1020-1045, September.
    8. Xie, Rong-hui & Yuan, Yi-jun & Huang, Jing-jing, 2017. "Different Types of Environmental Regulations and Heterogeneous Influence on “Green” Productivity: Evidence from China," Ecological Economics, Elsevier, vol. 132(C), pages 104-112.
    9. Yinhao Wu & Changhong Miao & Yehua Dennis Wei & Jianming Miao, 2021. "Investment location dynamics and influencing factors of pollution‐intensive industries in China: A study of chemical firms," Growth and Change, Wiley Blackwell, vol. 52(4), pages 1997-2015, December.
    10. Wugan Cai & Peiyun Ye, 2022. "Local-neighborhood effects of different environmental regulations on green innovation: evidence from prefecture level cities of China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 4810-4834, April.
    11. Liu, Wei & Zhao, Zhihui & Wen, Zhao & Cheng, Shixiong, 2022. "Environmental regulation and OFDI: Evidence from Chinese listed firms," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 191-208.
    12. Sun, Chuanwang & Zhan, Yanhong & Gao, Xiang, 2023. "Does environmental regulation increase domestic value-added in exports? An empirical study of cleaner production standards in China," World Development, Elsevier, vol. 163(C).
    13. Liu, Donghua & Ren, Shenggang & Li, Wenming, 2022. "SO2 emissions trading and firm exports in China," Energy Economics, Elsevier, vol. 109(C).
    14. Jana Stoever & John P. Weche, 2018. "Environmental Regulation and Sustainable Competitiveness: Evaluating the Role of Firm-Level Green Investments in the Context of the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 429-455, June.
    15. Rui Pang & Minjun Shi & Dan Zheng, 2022. "Who comply better? The moderating role of firm heterogeneity on the performance of environmental regulation in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(5), pages 6302-6326, May.
    16. Wang, Ailun & Hu, Shuo & Lin, Boqiang, 2021. "Can environmental regulation solve pollution problems? Theoretical model and empirical research based on the skill premium," Energy Economics, Elsevier, vol. 94(C).
    17. Sahar Milani, 2017. "The Impact of Environmental Policy Stringency on Industrial R&D Conditional on Pollution Intensity and Relocation Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 595-620, November.
    18. Bellelli, Francesco S. & Xu, Ankai, 2022. "How do environmental policies affect green innovation and trade? Evidence from the WTO Environmental Database (EDB)," WTO Staff Working Papers ERSD-2022-3, World Trade Organization (WTO), Economic Research and Statistics Division.
    19. Liangliang Liu & Donghong Ding & Jun He, 2019. "Fiscal Decentralization, Economic Growth, and Haze Pollution Decoupling Effects: A Simple Model and Evidence from China," Computational Economics, Springer;Society for Computational Economics, vol. 54(4), pages 1423-1441, December.
    20. Sabrina Auci & Giovanni Trovato, 2018. "The environmental Kuznets curve within European countries and sectors: greenhouse emission, production function and technology," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(3), pages 895-915, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:growch:v:52:y:2021:i:3:p:1701-1731. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0017-4815 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.