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What can the environmental rule of law do for environmental innovation? Evidence from environmental tribunals in China

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  • Zhou, Kuo
  • Luo, Haotian
  • Qu, Zhi

Abstract

We study the causal effects of legal institutions on firm environmental innovation by exploiting a quasi-experiment provided by a pilot reform program on environmental tribunals. Using the data on Chinese listed companies in heavy pollution industries, we find that firm environmental innovation significantly increases following the establishment of environmental tribunals with a difference-in-differences estimation. In addition, this finding is more significant in subsamples with state-owned enterprises, larger firms, and regions with deeper green consciousness and worse judicial environment. We also find that the environmental tribunals boost firm environmental innovation through strengthening judicial intervention, especially enhancing environmental regulation and increasing public environmental concerns. Our paper provides new insights into the pushing power of environmental innovation and the weak version of the Porter Hypothesis. Also, it serves as a reference for the construction of environmental tribunals in China and for other policymakers who may concern.

Suggested Citation

  • Zhou, Kuo & Luo, Haotian & Qu, Zhi, 2023. "What can the environmental rule of law do for environmental innovation? Evidence from environmental tribunals in China," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    • Handle: RePEc:eee:tefoso:v:189:y:2023:i:c:s0040162523000628
    DOI: 10.1016/j.techfore.2023.122377
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