Air pollution control and enterprise competitiveness – A re-examination based on China's Clean Air Action

Abstract

The “Air Pollution Prevention and Control Action Plan” is regarded as China's war against air pollution, which is also noted as China's Clean Air Action (CAA policy). Although abundant studies have focused on the impact of CAA policy on social activities, such as air quality, pollutants emission, and economic output, limited studies explore its impact on enterprise competitiveness from a more micro perspective. Improving total factor productivity (TFP) is essential to achieve economic efficiency and sustainable development. Identifying the impact and influence mechanism of the CAA policy on TFP is important for China to realize the coordinated development of environment and economy and promote high-quality economic development. Based on the difference-in-differences model, this paper evaluates the impact of the CAA policy on enterprise productivity. The empirical analysis shows that there is a significantly negative effect from the CAA policy to the TFP of polluting enterprises, indicating that the CAA policy has decreased enterprise productivity. Our finding is robust, after conducting several robustness tests, such as replacing different dependent indicators, adopting different policy measurement variables, considering other policy interventions and using propensity score matching. Besides, this paper also discusses the possible heterogeneities. This paper adds additional empirical evidence to understand the relationship between air pollution control and enterprise competitiveness. The conclusions of this paper have important practical significance for China to further promote air pollution control and perfect the environmental control system.