Impacts of Environmental Regulation on the Green Transformation and Upgrading of Manufacturing Enterprises

Liang Shen, Runjie Fan, Yuyan Wang, Zhaoqing Yu and Rongyun Tang
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Liang Shen: School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China
Runjie Fan: School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China
Yuyan Wang: School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China
Zhaoqing Yu: School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China
Rongyun Tang: Department of Industrial and System Engineering, University of Tennessee, Knoxville, TN 37996, USA

IJERPH, 2020, vol. 17, issue 20, 1-14

Abstract: Since environmental problems are becoming increasingly prominent, macro policies and social development have placed higher requirements on manufacturing enterprises to promote green transformation and upgrading (GTU) in China. Considering that different manufacturing enterprises choose different green technology innovation levels for GTU under environmental regulation, a game model between manufacturing enterprises and the government is constructed. The relationship between the green technology innovation level (GTIL) and the environmental regulation intensity is analyzed. Through numerical examples, the influences of environmental regulation and consumer preference on system decisions are further examined. Moreover, an econometric model is constructed to explore the influence that the environmental regulation exerts on the GTIL using panel data from the Chinese manufacturing industry. Our results show that the increase in environmental regulation intensity contributes to improving GTIL and promoting the GTU of manufacturing enterprises. Furthermore, as the environmental regulation is enhanced, the sales price decreases, benefiting consumers. Consumers’ preference for high-GTIL products is conducive to GTU under environmental regulation. Empirical analysis shows that there is a U-shaped relationship between environmental regulation and the GTIL. Only when the intensity reaches a threshold can the environmental regulation be beneficial to improve the GTIL and promote the GTU of Chinese manufacturing enterprises.

Keywords: environmental regulation; manufacturing enterprises; green transformation and upgrading; green technology innovation level (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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