The Impact of Environmental Regulation on the Location of Pollution-Intensive Industries in China under Agglomeration Effect

Abstract

Pollution-intensive industries (PIIs) have both scale effect and environmental sensitivity. Therefore, this paper studies how environmental regulation (ER) affects the location dynamics of PIIs under the agglomeration effect. Our results show that, ER can increase the production costs of pollution-intensive firms (PIFs) by internalizing the negative impact of pollutant discharge in a region, and thus, directly reduces the region’s attractiveness to PIFs. Meanwhile, ER can indirectly reduce the attractiveness of a region to PIFs by reducing the externality of the regional agglomeration effect. Moreover, these influences are regulated by the level of local economic development. Based on the moderated mediating effect model, we find evidence from the site selection activities of newly built chemical firms in cities across China. The empirical test shows that compared with 2014, the proportion of the direct effect of ER to the total effects significantly decreased in 2018, while the proportion of indirect effects under the agglomeration effect increased significantly. Our findings provide reference for the government to design effective environmental policies to guide the location choice of new PIFs.

Environmental regulation, land use efficiency and industrial structure upgrading: Test analysis based on spatial durbin model and threshold effect

“…At this stage, command-type ER tools would be more effective. Currently, the intensity of ER in China is still on the left side of the “U"-shaped curve, and ER may inhibit the transformation and ISU[ 33 ].…”

Does Environmental Regulation Help Mitigate Factor Misallocation?—Theoretical Simulations Based on a Dynamic General Equilibrium Model and the Perspective of TFP

“…The race to the bottom hypothesis mainly portrays the impact of environmental regulation on firms’ location decisions and business strategies, etc., and argues that the probability of firms’ proximity location shift is greatly increased under the increasingly stringent environmental regulation. At the same time, firms’ business decision-making also changes to adapt to changes in environmental regulation policies [ 46 , 47 , 48 ]. At the macro level, the economic effects of environmental regulation are mainly reflected in the effects on economic growth [ 49 ], industrial structure upgrading [ 50 , 51 ], total factor productivity [ 52 , 53 ], foreign trade, and outward investment attraction [ 54 , 55 , 56 ], etc.…”

Spatial Differentiation and Influencing Factors of Water Pollution-Intensive Industries in the Yellow River Basin, China

“…Domestic and foreign research on industrial development and its environmental pollution mainly focuses on the pollutant emission pattern of industry or on the manufacturing industry and its environmental effects [ 8 , 9 , 10 ], the relationship between the transfer of polluting industries and the environmental Kuznets curve [ 11 ], or the geographical distribution of PIIs and the agglomeration and transfer of industries [ 12 , 13 , 14 ]. There are also the definition and identification of PIIs according to different environmental factors, such as the identification and analysis of WPIIs [ 15 , 16 ].…”