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The existence and mechanism of the domestic pollution haven hypothesis: evidence from 265 cities in China

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  • Shimei Wu

    (Hunan University)

  • Haotian Zhang

    (University of Birmingham)

Abstract

This paper provides a synthetic framework for the verification of the existence and mechanism of the Domestic Pollution Haven Hypothesis (DPHH). We infer the existence of DPHH by estimating the Spatial Environmental Kuznets Curve (SEKC). Results show that the SEKC exists significantly at the city level in China with a U-shape, which supports the DPHH. Based on the pollution transfer calculated from a traditional EKC, we estimate the strategic responses of cities towards the behavior of neighboring cities, by using the Two-Regime Spatial Durbin Model (TR-SDM). We find that the “Race to Bottom/Excellence” strategy dominates the pollution transfer at the city level in China. This paper has important policy implications for the environmental inspection and the differentiation of foreign industries.

Suggested Citation

  • Shimei Wu & Haotian Zhang, 2022. "The existence and mechanism of the domestic pollution haven hypothesis: evidence from 265 cities in China," Letters in Spatial and Resource Sciences, Springer, vol. 15(3), pages 287-310, December.
    • Handle: RePEc:spr:lsprsc:v:15:y:2022:i:3:d:10.1007_s12076-021-00285-2
    DOI: 10.1007/s12076-021-00285-2
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    References listed on IDEAS

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