Decentralization of environmental management and enterprises’ environmental technology innovation: evidence from China

Ling Guo and Xiaoni Jiang

Applied Economics, 2022, vol. 54, issue 36, 4170-4186

Abstract: We construct an environmental decentralization index and use spatial econometric modeling to test the government’s role in promoting environmental technology innovation at the enterprise level. The results show that a moderate increase in the degree of environmental decentralization is conducive to promoting local enterprises’ environmental innovation and avoiding excessive distortions caused by externalities. Further investigation reveals that the effect is more pronounced when local tax competition is taken into account. However, administrative decentralization and supervision decentralization have different effects on enterprises’ environmental innovation. An increase in administrative decentralization has a negative impact on enterprise innovation, and environmental supervision should be more focused on the central government, which can help avoid excessive distortion caused by externalities. Our analysis is of certain reference value for understanding the influence of rational allocation of environmental protection functions among different levels of government on enterprises’ environmental innovation activities.

Date: 2022
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DOI: 10.1080/00036846.2021.2022093

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