Environmental Regulation, Government Subsidies, and Green Technology Innovation—A Provincial Panel Data Analysis from China

Pei Wang, Cong Dong, Nan Chen, Ming Qi, Shucheng Yang, Amuji Bridget Nnenna and Wenxin Li
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Pei Wang: School of Business Administration, China University of Petroleum-Beijing, Beijing 102249, China
Cong Dong: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Nan Chen: School of Business Administration, China University of Petroleum-Beijing, Beijing 102249, China
Ming Qi: School of Business Administration, China University of Petroleum-Beijing, Beijing 102249, China
Shucheng Yang: School of Business Administration, China University of Petroleum-Beijing, Beijing 102249, China
Amuji Bridget Nnenna: School of Business Administration, China University of Petroleum-Beijing, Beijing 102249, China
Wenxin Li: School of Business Administration, China University of Petroleum-Beijing, Beijing 102249, China

IJERPH, 2021, vol. 18, issue 22, 1-19

Abstract: Economic development in the “new era” will require green innovation. To encourage the growth of green technology innovation, it has become fashionable to strengthen environmental regulation. However, the impact of environmental regulation on green technology innovation, as well as the role of government subsidies, needs to be examined. Utilizing fixed-effect models and 2SLS models to explore the impact of environmental regulation on green technology innovation in China from 2003 to 2017, this research sought to examine whether environmental regulations impact green technology innovation, as well as the role of government subsidies in the above-mentioned influence path. The findings support the Porter Hypothesis by demonstrating an inverted “U” relationship between environmental regulation and green technology innovation. The impact of environmental regulation on green technology innovation varies by region. To be specific, there is an inverted “U” relationship between environmental regulation and green technology innovation in China’s central and central coast regions. In comparison, the north area, southern coast, and southwest region exhibit a “U” relationship between the two. The relationship is not significant in the Beijing-Tianjin region. Additionally, government subsidies act as an intermediate in this process, positively influencing firms to pursue green technology innovation during the earliest stages of environmental regulation strengthening. However, government subsidies above a certain level are unproductive and should be used appropriately and phased off in due course.

Keywords: environmental regulation; government subsidies; green technology innovation; China (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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