Can comprehensive environmental regulation trigger green innovation? evidence from the low-carbon city pilot policy and green patents of listed industrial enterprises

ABSTRACT

Using the gradual promotion of China’s low-carbon city pilot policy (LCCPP) as a quasi-natural experiment, this study investigates the impact of comprehensive environmental regulation on green innovation represented by green patents of listed industrial enterprises. Our results revealed that enterprises located in cities with LCCPP produced a high intensity and volume of green patents. LCCPP increased the proportion of green invention, green utility model, and total green patents by 1.26%, 0.72%, and 0.84%, respectively. Moreover, we found that enterprises located in eastern cities and those with high research and development intensity and productivity were likely to benefit most from LCCPP, and LCCPP also triggered green innovation in high-emission and high-energy-consuming industrial sectors. Our results suggest that, for developing economies, a flexible and comprehensive environmental regulation that combines command-and-control and market-based regulations would be preferable for promoting enterprises’ green innovation.

KEYWORDS:

• Comprehensive environmental regulation
• low-carbon city pilot policy
• green innovation
• green patents
• listed industrial enterprises

JEL CLASSIFICATION:

• L51
• O20
• O31
• Q28

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ In 2010, 2012, and 2017, the NDRC launched the first, second, and third batch of low-carbon pilot projects in 5 provinces and 8 cities, 1 province and 28 cities, and 45 cities (districts and counties), respectively. In this study, the low-carbon pilot provinces, districts, and counties were decomposed or upgraded to the prefecture-level city level..

² The number of green invention patent applications, number of green utility model patent applications, and total green patent applications. We adjusted the three variables with logarithmic transformation as Ln(x + 1).

Additional information

Funding

This work was supported by the Humanities and Social Science Fund of Ministry of Education ofChina under Grant [19YJC790006]; the National Social Science Fund of Chinaunder Grant [21CGL036].