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Does Tax Competition Among Local Governments Improve the Green Economic Efficiency in the Yellow River Basin?

Author

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  • Jile Sun

    (School of Economics, Qingdao University, Qingdao 266071, China)

  • Xiao Sun

    (School of Economics, Qingdao University, Qingdao 266071, China)

  • Yihan Wang

    (School of Economics, Qingdao University, Qingdao 266071, China)

Abstract

Green development stands as an imperative pathway for China’s growth model. Enhancing green economic efficiency is crucial to maintaining sustainable development in the Yellow River Basin. The hierarchical governance structure of China’s economic development system inherently links competition among governments to potential impacts on the basin’s green economic efficiency, yet research in this area remains scarce. This study utilizes a panel data structured dataset containing both temporal and cross-sectional dimensions from nine provinces in the Yellow River Basin to investigate how tax competition among local governments affects green economic efficiency. The empirical results demonstrate that tax competition hinders green economic efficiency in the Yellow River Basin, exhibiting spatial heterogeneity in its inhibitory effect. Specifically, the inhibitory effect on the middle reaches is approximately twice as significant as that observed on the upper reaches, while the inhibitory effect on the lower reaches is found to be facilitative. In addition, the upgrading of industrial structure and industrial agglomeration triggered by tax competition partially alleviate the inhibitory effect on green economic efficiency. Therefore, policymakers can promote the sustainable development of the Yellow River Basin by optimizing the tax system, implementing regional differentiation strategies, optimizing industrial layout, and promoting the development of green clusters.

Suggested Citation

  • Jile Sun & Xiao Sun & Yihan Wang, 2025. "Does Tax Competition Among Local Governments Improve the Green Economic Efficiency in the Yellow River Basin?," Sustainability, MDPI, vol. 17(11), pages 1-20, June.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:11:p:5165-:d:1671789
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