Abstract

This paper studies the relationship between environmental regulations and productivities. Firms' total factor productivities are measured by Levinsohn-Petrin approach for reexamining the Porter hypothesis. A two-stage approach is adapted for modifying the endogeneity of pollution abatement. While pollution abatement investment and pollution abatement expenditure are as regulation indicators, we find that there is positive and significant relationship between pollution abatement investment and firms' productivities. And the effect of pollution abatement expenditure on firms' productivities is negative.

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