 Regulations, politics, and firm green innovationJian Xu and Yan Sheng Economic Analysis and Policy, 2023, vol. 80, issue C, 13-32 Abstract: We examine impacts of environmental regulations and political incentives on firms’ green innovation. By exploiting a natural experiment on reduction of sulfur dioxide (SO2) emissions in China, we show that the environmental regulation significantly enhances firms’ green innovations. For 1% increase in provincial SO2 reduction targets, there is average 1.77% (2.67%) increase in green patent amount (quality). A plausible mechanism driving our findings is that target-based performance evaluation in political promotion may properly motivate local bureaucrats to exert pressures on firms to implement environmentally friendly innovations. However, local bureaucrats’ political turnover and short-term pressures of economic growth negatively moderate our findings. Our findings are more pronounced to state-owned, non-financing constrained firms and firms under eastern provinces or SO2-filled industries. Keywords: Environmental regulation; Political connection; Green innovation; Quasi-natural experiment; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:80:y:2023:i:c:p:13-32 DOI: 10.1016/j.eap.2023.07.014 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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