Can public environmental concern inhibit the market entry of polluting firms: Micro evidence from China

Abstract

When constructing a multigovernance environment system, it is important to systematically study the impact of the public’s environmental concern on the behavior of polluting firms. In relation to the market entry of polluting firms, this paper explores whether public concern for the environment can effectively reduce the likelihood of such firms entering the market to achieve control of pollution emissions at the source. Benchmark analysis shows that an increase in public environmental concern can inhibit the market entry of polluting firms in the region. Heterogeneity analysis shows that public environmental concerns exert a stronger effect on preventing the market entry of nonstate-owned firms and firms in developed regions than on other firm types. Mechanism analysis shows that improving the severity of environmental regulations, encouraging firms to make greater investments in environmental protection, and inducing firms to pursue additional environmental R&D innovation are effective mechanisms by which public environmental concern restrains the market entry of polluting firms in the region. Expansion analysis demonstrates that public concern about the environment can lessen the pollution emission intensity of new firms and promote certain new firms to carry out boundary layout. This research offers a scientific basis and policy reference that can serve to guide the public in actively participating in environmental governance.