Environmental regulation and green technology innovation: incentive or disincentive effect? New evidence from resource-based cities in China.

Abstract

Under the dual constraints of resources and environment, it is important to stimulate green technology innovation and promote urban development through environmental regulation. Previous literature on the impact of environmental regulation on innovation in green technology has focused only on its unilateral effects, ignoring the bilateral effects of environmental regulation, and has not been fine-tuned for resource-based cities. This study evaluates the disincentive, incentive, and net effects of environmental restrictions on green technology innovation using a bilateral stochastic frontier model for 115 resource-based prefecture-level cities in China from 2010 to 2019. The findings reveal that: (1) Green technology innovation in resource-based cities is subject to both innovation incentives and cost inhibiting effects of environmental regulations. The disincentive effect of environmental regulation in resource-based cities is 28.63%, the incentive effect is 23.83%, and the net effect is - 4.8 %. (2) The temporal characteristics of the bilateral effects show that the dominant effects are different in different periods, and the net effect shows a "suppression-promotion" process. In the sample years, the net effect shows a decreasing trend during 2013-2014 and an increasing trend after 2015. (3) For resource-based cities with different life cycles, the impact of environmental regulation on green technology innovation is different, and the average value of the net effect of green technology innovation in resource-based cities is declining, mature, regenerating, and growing cities in descending order.