Air pollution and innovation-evidence from quasi-natural experiment of China’s Huai River policy

Zhuo Qiao, Zhaohua Li () and Yanzhi Wang ()
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Zhaohua Li: Lincoln University
Yanzhi Wang: National Taiwan University

Review of Quantitative Finance and Accounting, 2023, vol. 60, issue 2, No 1, 425-443

Abstract: Abstract We examine the effect of air pollution on innovation activity by studying city-level patenting activities and air pollution index (API) in China. We use a novel quasi-natural experiment of China’s Huai River policy, which provides subsidy for winter heating to cities north of the Huai River but not to cities to the south, to estimate the impact of air pollution on innovation performance. Based on spatial regression discontinuity design, we find that API is 0.145 higher in the north and the number of patents per city is 25.5% lower in the north. Further analysis shows that increases in API are associated with significant reduction in the number of patents per city, suggesting that air pollution significantly impedes innovation activities.

Keywords: Air pollution; Innovation; Patent; Huai River; Regression discontinuity (search for similar items in EconPapers)
JEL-codes: O30 Q50 Q53 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11156-022-01097-1

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