Environmental regulation and urban position in the inter-urban pollution transfer network: A perspective on network analysis of pollution-intensive enterprises’ relocation

Abstract

Given the unstable global political situation and increasing uncertainty of worldwide trade, governments and enterprises value more on domestic relocation and cooperation which could lead to a tendency of more pollution transfer within a country. Previous studies have revealed the impact of environmental regulation on enterprises' relocation, but the relationship between urban environmental regulation and its position in the inter-urban pollution transfer network has not been revealed. This paper studies how environmental regulations imposed by local governments have influenced the inter-urban pollution transfer network within a country. Based on theoretical analysis, we apply the econometric models to a unique dataset on firm-level relocation activities of listing polluting enterprises in China from 2010 through 2019. We find that the inter-urban pollution transfer network with hierarchical structures evolves rapidly, and there is increasing nationwide pollution transfer between cities in China. Environmental regulation positively affects urban net out-degree centrality in the pollution transfer network by increasing polluting enterprises’ compliance costs. There is a spillover effect of environmental regulations, and environmental regulations in neighboring cities impact more on local net out-degree centrality in the pollution transfer network.