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Does the Porter hypothesis hold in China? evidence from the “2+26” regional air pollution treatment policy

Published online by Cambridge University Press:  29 April 2024

Weijie Luo Open the ORCID record for Weijie Luo [Opens in a new window] ,
Di Xiang  and
Xiaoming Zhang
Weijie Luo
Affiliation:
School of Economics, Beijing International Studies University, Beijing, P.R. China
Di Xiang*
Affiliation:
Economics Department, University of Chinese Academy of Social Sciences, Beijing, P.R. China
Xiaoming Zhang
Affiliation:
School of Public Policy & Management, Tsinghua University, Beijing, P.R. China
*
*Corresponding author: Di Xiang; E-mail: [email protected]
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Abstract

This study analyzed the impact of environmental regulation, specifically the “2+26” regional strategy for air quality improvement, on corporate research and development (R&D) investment in China. We developed a theoretical model based on the argument that R&D investment rises with regulation intensity. Using 2010–2019 data from China's listed companies located in the Beijing-Tianjin-Hebei region and its surrounding areas, we treated the $2+26$ policy as a quasi-natural experiment and adopted a difference-in-differences approach to explore its effect on firm R&D input. A positive association was observed between firm R&D intensity and the $2+26$ strategy's implementation in major polluting industries. Our results provide in-depth insights into the $2+26$ strategy's economic consequences, which are potentially of interest to both scholars and policymakers.

Keywords

air quality improvementporter hypothesisresearch and development investment“2 + 26” regional strategy

JEL classification

L51: Economics of Regulation O30: General Q53: Air Pollution • Water Pollution • Noise • Hazardous Waste • Solid Waste • Recycling
Type
Research Article
Information
Environment and Development Economics , Volume 29 , Issue 4 , August 2024 , pp. 319 - 337
Copyright
Copyright © The Author(s), 2024. Published by Cambridge University Press

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