Environmental Target Constraint and Corporate Pollution Emissions: Evidence from China

Yu Zhang, Lijun Hu and Ruilei Liu ()
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Yu Zhang: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
Lijun Hu: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
Ruilei Liu: School of Economics, Xiamen University, Xiamen 361005, China

Sustainability, 2025, vol. 17, issue 9, 1-20

Abstract: Combining Chinese industrial enterprise data and the green development database, this paper delves into the causal link between environmental target constraints (ETCs) and pollution emissions using the difference-in-differences (DID) framework. The empirical results reveal that ETC significantly reduces pollution emissions from manufacturing enterprises in China, lowering pollution levels by 0.47%. This conclusion remains robust after a battery of sensitivity tests, including the difference-in-differences-in-differences (DDD) approach and the PSM-DID method, among others. Heterogeneity analyses suggest that this causal impact appears more pronounced for private firms, exporting firms, and enterprises located in non-resource-based cities. A deeper analysis explores the mechanisms through which ETCs influence pollution emissions, highlighting output scale contraction, technological innovation, and resource allocation optimization as key transmission channels.

Keywords: pollution emissions; environmental target constraints; resource endowments; difference-in-differences (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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