Does environmental regulation pressure induce the green innovation of enterprises? Quasi-natural experiment of China's air pollution prevention and control action plan

Abstract

ABSTRACT Air Pollution Prevention and Control Action Plan (APPCAP) is one of the most influential command-and-control environmental regulations (CMC) in China. Whether it can promote the green innovation performance of enterprises remains unclear. Based on the ‘Green Patent List’ issued by the World Intellectual Property Organization (WIPO) and the Chinese listed companies’ data, this paper applies the quasi-natural experiment methods of the difference-in-differences model and difference-in-difference-in-differences model to identify the impact of environmental regulation pressure on the green innovation of enterprises. The study finds that implementing the APPCAP promotes the enterprises’ green innovation performance in quantity and quality. Heterogeneity analysis shows that the green innovation effect of APPCAP is more obvious for those samples in the eastern region, with features of capital-intensive, labour-intensive, and low market concentration. Furthermore, our findings further support the weak version of the Porter hypothesis (PH), Whose path is that the implementation of APPCAP induces enterprises’ green innovation by promoting their innovation investment. These findings provide policy implications for the coordination of environmental regulation and green transformation in pursuit of the goal of carbon peaking and carbon neutrality goals.