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Environmental Target Constraint and Corporate Pollution Emissions: Evidence from China

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  • Yu Zhang

    (School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Lijun Hu

    (School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Ruilei Liu

    (School of Economics, Xiamen University, Xiamen 361005, China)

Abstract

Combining Chinese industrial enterprise data and the green development database, this paper delves into the causal link between environmental target constraints (ETCs) and pollution emissions using the difference-in-differences (DID) framework. The empirical results reveal that ETC significantly reduces pollution emissions from manufacturing enterprises in China, lowering pollution levels by 0.47%. This conclusion remains robust after a battery of sensitivity tests, including the difference-in-differences-in-differences (DDD) approach and the PSM-DID method, among others. Heterogeneity analyses suggest that this causal impact appears more pronounced for private firms, exporting firms, and enterprises located in non-resource-based cities. A deeper analysis explores the mechanisms through which ETCs influence pollution emissions, highlighting output scale contraction, technological innovation, and resource allocation optimization as key transmission channels.

Suggested Citation

  • Yu Zhang & Lijun Hu & Ruilei Liu, 2025. "Environmental Target Constraint and Corporate Pollution Emissions: Evidence from China," Sustainability, MDPI, vol. 17(9), pages 1-20, April.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:9:p:3980-:d:1644956
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