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Air pollution and innovation-evidence from quasi-natural experiment of China’s Huai River policy

Author

Listed:
  • Zhuo Qiao

    (University of Macau)

  • Zhaohua Li

    (Lincoln University)

  • Yanzhi Wang

    (National Taiwan University
    National Taiwan University)

Abstract

We examine the effect of air pollution on innovation activity by studying city-level patenting activities and air pollution index (API) in China. We use a novel quasi-natural experiment of China’s Huai River policy, which provides subsidy for winter heating to cities north of the Huai River but not to cities to the south, to estimate the impact of air pollution on innovation performance. Based on spatial regression discontinuity design, we find that API is 0.145 higher in the north and the number of patents per city is 25.5% lower in the north. Further analysis shows that increases in API are associated with significant reduction in the number of patents per city, suggesting that air pollution significantly impedes innovation activities.

Suggested Citation

  • Zhuo Qiao & Zhaohua Li & Yanzhi Wang, 2023. "Air pollution and innovation-evidence from quasi-natural experiment of China’s Huai River policy," Review of Quantitative Finance and Accounting, Springer, vol. 60(2), pages 425-443, February.
    • Handle: RePEc:kap:rqfnac:v:60:y:2023:i:2:d:10.1007_s11156-022-01097-1
    DOI: 10.1007/s11156-022-01097-1
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    More about this item

    Keywords

    Air pollution; Innovation; Patent; Huai River; Regression discontinuity;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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