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

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  • Luo, Weijie
  • Xiang, Di
  • Zhang, Xiaoming

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.

Suggested Citation

  • Luo, Weijie & Xiang, Di & Zhang, Xiaoming, 2024. "Does the Porter hypothesis hold in China? evidence from the “2+26” regional air pollution treatment policy," Environment and Development Economics, Cambridge University Press, vol. 29(4), pages 319-337, August.
    • Handle: RePEc:cup:endeec:v:29:y:2024:i:4:p:319-337_3
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