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Research on the nonlinear mechanism underlying the effect of tax competition on green technology innovation - An analysis based on the dynamic spatial Durbin model and the threshold panel model

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  • Deng, Yaling
  • You, Daming
  • Wang, Jingjing

Abstract

A consensus has been reached that tax competition has led to the distortion of the implementation of environmental regulation, which has an important impact on China's green and high-quality development. Considering innovatively the spatial spillover effects of both green technology innovation and tax competition, the spatial econometric model and the threshold panel model have been incorporated to analyse the nonlinear impact of income tax competition and environmental tax competition on green technology innovation. Our empirical results reveal that (1) the green technology innovation of different regions exhibits a positive spatial agglomeration effect. Obviously, the Yangtze River Delta and the Beijing-Tianjin-Hebei region belong to the high-high region, while the western region belongs to the low-low region. (2) Income tax competition and environmental tax competition have an inverted U-shaped impact on green technology innovation in this region and neighbouring areas, but their thresholds are quite different. (3) There is regional heterogeneity in the nonlinear relationship between tax competition and green technology innovation, which can be affected by the level of economic development and the pollution emission levels. (4) In China from 2005 to 2017, the income tax competition in various regions was fiercer than the environmental tax competition. The conclusions are conductive to explaining the low efficiency of environmental regulations and provide theoretical guidance for policy makers to improve the green technology innovation system.

Suggested Citation

  • Deng, Yaling & You, Daming & Wang, Jingjing, 2022. "Research on the nonlinear mechanism underlying the effect of tax competition on green technology innovation - An analysis based on the dynamic spatial Durbin model and the threshold panel model," Resources Policy, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:jrpoli:v:76:y:2022:i:c:s0301420721005523
    DOI: 10.1016/j.resourpol.2021.102545
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