 Opening the black box of capacity governance: Environmental regulation and capacity utilization of microcosmic firms in ChinaMengjie Li and Weijian Du Economic Modelling, 2022, vol. 108, issue C Abstract: The existing literature primarily explores overcapacity governance from the perspective of industrial policies, and few studies have directly examined the relationship between environmental regulation and overcapacity. However, the production scale expansion caused by neglecting environmental costs is the key reason for overcapacity. Based on the matching data of Chinese firms in the years 2000–2010, this study empirically explores the influence and channels of environmental regulation on the capacity utilization of firms. A benchmark analysis finds that environmental regulation improves the capacity utilization of firms. On exploring the plausible channels, we show that environmental regulation improves capacity utilization by promoting technical progress and correcting market distortion and inhibits capacity utilization by increasing production costs. This study opens the black box of capacity governance from a micro perspective and provides a scientific basis for realizing capacity governance. Keywords: Environmental regulation; Overcapacity governance; Capacity utilization; Underlying channels; 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:ecmode:v:108:y:2022:i:c:s0264999322000128 DOI: 10.1016/j.econmod.2022.105766 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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