Abstract
Enhancing urban innovation is the basic for promoting regional and national innovation. With data of 103 Chinese cities from 2007 to 2016, this paper takes low-carbon pilot cities (LCPC) program in China as an example to evaluate the impact of voluntary environmental regulation on urban innovation. The results show that the implementation of LCPC program has significantly inhibited urban innovation, with findings robust to a series of robustness tests. Further mechanism analysis reveals that LCPC program significantly exacerbates firm growth environment and urban industrial foundation, such as reducing industrial firm number and foreign investment projects. Besides, less obvious detrimental policy effect is observed in pilot cities located in eastern China and cities led by locally promoted officials. Our paper extends the study of urban innovation, and provides experience in formulation and implementation of voluntary environmental regulation for other developing countries.
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