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Patterns of environmental regulation and green innovation in China

Author

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  • Song, Wenfei
  • Han, Xianfeng
  • Liu, Qiange

Abstract

Green technology innovation is an important means to achieve sustainable development. The study is an exploration of the bilateral perspective on the relationship between different types of environmental regulations and green innovation. Based on the data set of 30 provinces in China from 2006 to 2018, the two-sided effects of command-and-control environmental regulation and market-based environmental regulation on green innovation are analysed and the net effects are calculated by using the two-tier stochastic frontier models. First, empirical research shows that the effects of command-and-control environmental regulation and market-based environmental regulation on green innovation are both highlighted by negative characteristics. Command-and-control environmental regulation has a smaller effect on green innovation, with an average positive effect of 0.00005, which is smaller than the average negative effect of 0.0008. Meanwhile, the positive effect of market-based environmental regulation on green innovation is 0.00291, smaller than the negative effect of 0.00461. Second, the negative impact of command-and-control environmental regulation on green innovation underwent a "back-to-N" change process in 2006–2018, while the negative effect of market-based environmental regulation on green innovation did not decline until after 2011. Third, the provinces where command-and-control environmental regulation policies have a greater negative effect are concentrated in the energy-intensive regions of central and western China, while the provinces where market-based environmental regulation policies can promote green innovation are from the energy-intensive or developed eastern regions of China. Based on the research conclusions, to better promote green innovation, there is a need to implement environmental regulatory policies that address regional differences and to establish a national system of green innovation markets.

Suggested Citation

  • Song, Wenfei & Han, Xianfeng & Liu, Qiange, 2024. "Patterns of environmental regulation and green innovation in China," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 176-192.
  • Handle: RePEc:eee:streco:v:71:y:2024:i:c:p:176-192
    DOI: 10.1016/j.strueco.2024.07.006
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    More about this item

    Keywords

    Two-tier stochastic frontier model; Green innovation; Command-and-control environmental regulation; Market-based environmental regulation; Two-sided effects;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H00 - Public Economics - - General - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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