The Impact of Environmental Regulation on Productivity and Exports: A Firm-Level Evidence from China

Xiaobing Huang and Xiaolian Liu

Emerging Markets Finance and Trade, 2019, vol. 55, issue 11, 2589-2608

Abstract: This paper investigates the influence of environmental regulation on firm performance, as captured by firm productivity and firm exports. We first construct a Melitz-style model investigating the causal effects of environmental regulation on firm productivity and firm exports, and then test the theoretical predictions using firm-level data over the period 2005–2009. The theoretical and empirical investigation suggests that environmental regulation promotes firm productivity slightly with a lagged effect, has a harmful impact on firm exports, and has a U-shaped relationship with firm exports. China is to the far left of the inflection point, but this U-shaped relationship is not present at firms in clean industries and clean regions.

Date: 2019
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DOI: 10.1080/1540496X.2019.1584556

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