Environmental regulation and green innovation efficiency: a revisit of the porter hypothesis based on Chinese cities

Liang Xu (), Yusen Luo (), Chao Wu (), Muhammad Umar (), Hongbo Li () and Sulaman Muhammad ()
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Liang Xu: Jiangsu University
Yusen Luo: Jiangsu University
Chao Wu: Jiangsu University
Muhammad Umar: Lebanese American University
Hongbo Li: Jiangsu University
Sulaman Muhammad: Brandenburg University of Technology

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2025, vol. 27, issue 5, No 77, 11819-11843

Abstract: Abstract Green innovation efficiency (GIE) is the crux to promote sustainable development. This study revisited the Porter hypothesis by probing the role of environmental regulation (ER) on GIE. Using the panel of 276 Chinese cities during 2004–2018, the metafrontier super Epsilon-based measure (M-Super-EBM) model with undesirable output was utilized to calculate the GIE. Based on this, two-way fixed effect and threshold regression models were employed to verify the nexus between ER and GIE. The results showed that the average of China’s GIE during the sample period was 0.619. East China had the largest GIE, followed by Northeast China. The two-way fixed effect regression results indicated ER exerted a significant promotion impact on GIE, which remained validated after a string of robust analysis. Additionally, this promotion only works for areas in East China and Northeast China, cities with higher GIE, non-resource-based cites and ordinary prefecture level. The threshold regression results found that the promotion influences of different control variables on GIE will turn larger when ER exceeds the threshold points. Hence, it is imperative to strengthen the ER intensity.

Keywords: Environmental regulation; Green innovation efficiency; Porter’s hypothesis; China (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10668-023-04384-6

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