The Porter Hypothesis Goes to China: Spatial Development, Environmental Regulation and Productivity

Pedro Naso and Timothy Swanson

No 53-2017, CIES Research Paper series from Centre for International Environmental Studies, The Graduate Institute

Abstract: We examine the relationship between environmental regulation and competitiveness in China. Exploiting exogenous changes in national pollution standards for three industries—ammonia, paper and cement—we test whether environmental regulation increases industry productivity. Our results show that the strong version of the Porter hypothesis does not hold, but that regulation might reallocate productivity spatially. We show that regulated industries that are located in newly developing cities see an increase in their productivity as compared to the same industries in other cities. This means that environmental regulation is more likely to drive the spatial distribution of productivity changes than it is to drive the pace and direction of technological change.

Keywords: Tax competition; Production Technology and Environment and Development (search for similar items in EconPapers)
JEL-codes: D24 H71 O13 Q56 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2017-10-04
New Economics Papers: this item is included in nep-cna, nep-eff, nep-ene, nep-env, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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