Heterogeneous environmental regulation tools and green economy development: evidence from China

Abstract

The implementation of environmental regulation policy by the government is usually an effective tool to reduce local pollution emissions. The super-efficient SBM model of unexpected output was used in this study to estimate green economy development levels in 30 Chinese provinces from 2010 to 2019 and constructed a panel econometric model. It empirically tested the theoretical hypothesis and mechanism of heterogeneous environmental regulation affecting green economy development by using the least squares estimation, the instrumental variable method, spatial panel regression, the mediating effect model, and further models. The relationship between command-controlled environmental regulation and green economy development was U-shaped, whereas green economy development was not significantly influenced by market-incentive environmental regulations. Command-controlled environmental regulation affected green economy development via the progress of pollution control technology and production technology. The strengthening of command-controlled environmental regulation progressed pollution control technology as regional enterprises continually improved, while production technology was initially suppressed, then promoted. Market-incentive environmental regulation mainly affected the green economy development level through pollution control technology progress, while the mediating effect of production technology progress was insignificant. This study provides some empirical support for the verification of Porter’s win-win hypothesis and the realization of green economic transformation in emerging countries such as China.

Keywords

• heterogeneous environmental regulation
• technical progress
• green economic development
• Porter's win-win hypothesis