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Export cost of air pollution: A regression discontinuity design

Author

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  • Qi, Jianhong
  • Wang, Shanshan
  • Zhang, Zhitong

Abstract

This study examines the impact of air pollution on exports in China using a regression discontinuity design based on the Qinling Mountains-Huai River line. The findings show that air pollution harms firm exports, with a more pronounced impact on non-state-owned enterprises, heavily polluting industries, and densely populated regions. Specifically, a 1 % increase in air pollution correlates with an average reduction of 0.661 % in exports. These inhibitory effects are mainly caused by decreasing productivity, reducing markup rates, damaging regional quality reputations, causing labour resource misallocation and strengthening environmental regulations. Although air pollution spillovers from neighbouring cities may temporarily boost local firm exports and total production, they do not fully mitigate the overall negative impact of air pollution.

Suggested Citation

  • Qi, Jianhong & Wang, Shanshan & Zhang, Zhitong, 2024. "Export cost of air pollution: A regression discontinuity design," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 337-353.
    • Handle: RePEc:eee:streco:v:71:y:2024:i:c:p:337-353
    DOI: 10.1016/j.strueco.2024.08.009
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    More about this item

    Keywords

    Air pollution; Firm exports; Regression discontinuity design; Geographic correlation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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