Abstract
China is implementing increasing stringent command‐and‐control environmental regulations to achieve high‐quality development. However, we have limited understanding about whether such policies are effective. This study selects the policy of China’s National Environmental Protection “Eleventh Five‐Year Plan” as a quasi‐natural experiment and uses the difference‐in‐differences (DID) method to analyze the effect of stricter command‐controlled environmental regulations on total factor productivity from the enterprise level. Our results indicate that stricter command‐and‐control environmental regulation promotes TFP of enterprises throughout the country. This effect is even greater in long‐established, large‐scale, or low capital density enterprises. In addition, stricter command‐and‐control environmental regulation has a greater positive effect on the TFP of companies in industries with high pollution intensity and fierce competition. Furthermore, government transformation and market green preference will magnify the positive effect of stricter command‐and‐control environmental regulation on corporate TFP. Moreover, stricter command‐and‐control environmental regulation promotes the growth of enterprise TFP mainly by improving the efficiency of resource allocation within and between enterprises, rather than stimulating innovation. Local governments should refine pollution control policies, optimize the external environment, and enhance the innovation power of enterprises.
Highlights
Albrizio et al [6] reported that, compared to commandand-control environmental regulations, market-based environmental regulations are more flexible, suggesting that the latter can effectively encourage companies to adopt appropriate technologies to enhance their competitiveness
The pollutant emission control target proposed in the “Eleventh Five-Year Plan” represented a turning point where stricter command-and-control environmental regulations come into play
Scholars believe that market-based environmental regulations are more effective than command-and-control environmental regulations, China is still dominated by command-and-control environmental regulations and the strength of command-and-control environmental regulations is increasing, which seems to be contradictory. e existing literature does not analyze the role of stricter command-and-control environmental regulation, so it is no longer applicable to the current economy. is paper selects the policy of China’s National Environmental Protection “Eleventh Five-Year Plan” as a quasi-natural experiment, and uses the DID method to analyze the effect of stricter command-controlled environmental regulations on the total factor productivity of enterprises
Summary
Two representative theories exist for the relationship between environmental regulation and TFP. Aware of the above-mentioned problems, some scholars have used DID methods to study the effects of China’s command-and-control environmental regulations and market-based environmental regulations on total factor productivity based on corporate data. Since the previous research is no longer applicable to the current economy, this paper selects the policy of the “Eleventh Five-Year Plan” as a quasi-natural experiment and uses the DID method to analyze the effect of stricter command-controlled environmental regulations on total factor productivity from the enterprise level. With the enrichment of data and the deepening of research, scholars have noticed that the effects of environmental regulations on productivity vary at both the industry and enterprise levels. Erefore, the transformation of government governance determines the quality of the market competition environment, which will directly affect innovation and resource allocation, and affect the total factor productivity of enterprises.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
