Impact of Heterogeneous Environmental Regulation on Carbon Emissions: Firm-Level Evidence from China's Manufacturing Industry

Keminhui Liu

International Journal of Economics and Finance, 2024, vol. 16, issue 12, 44

Abstract: Government implementation of environmental regulatory measures is typically an efficacious means of mitigating carbon emissions from firms, and the diversification of regulatory forms provides producers with diversified choice space so that enterprises can choose ecologically favorable production methods according to their own circumstances. Based on the unbalanced panel data of 2140 listed manufacturing companies in China from 2011 to 2019, this study uses a fixed-effects model to investigate the impact and mechanisms of command-and-control, market-based, and public participation environmental regulations on corporate carbon emissions. The study finds that all three types of environmental regulations significantly reduce corporate carbon emissions, and the results are robust. Mechanism tests suggest that environmental regulations can reduce corporate carbon emissions by increasing research and development (R&D) investment. Heterogeneity analysis indicates that the carbon reduction effect of environmental regulations is more pronounced in samples of enterprises in the eastern region, heavily-polluting industries, and highly marketized industries. Further analysis reveals that digital transformation negatively moderates the impact of command-and-control and public participation environmental regulations on corporate carbon emissions. The aforementioned findings offer policymakers significant empirical evidence on effectively promoting the development of low-carbon initiatives and enhancing coordination in China’ s government regulations for environmental governance.

Date: 2024
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