The Impact of Exogenous Pollution on Green Innovation

Ying Wang (), Richard Woodward and Jing-Yue Liu ()
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Ying Wang: Texas A&M University
Jing-Yue Liu: Hunan University

Environmental & Resource Economics, 2022, vol. 81, issue 1, No 1, 24 pages

Abstract: Abstract Does environmental quality affect firms’ activities that might improve that quality? In this paper, we use China's public heating policy as a quasi-experiment to investigate the impact of exogenous pollution differences on green innovation behavior. We use a regression discontinuity model, and carry out a suite of robustness tests. We consistently find that firms located in cities with an exogenous source of heavy pollution tend to adopt green innovation at a lower rate while we find no difference in the rate at which they adopt non-green innovation. We find a strong causal effect: being north of the boundary, where pollution levels are higher, leads firms to adopt less green innovation. Firms located in the heating areas report roughly 1 less green innovation per billion RMB of assets, a substantial difference given the average number of green innovations per billion RMB of assets of northern firms is 0.641.

Keywords: China; Green innovation; Pollution; Quasi-experiment; Regression discontinuity (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10640-021-00614-5

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