Does factor market distortion affect industrial pollution intensity? Evidence from China

This study investigates the nexus between factor market distortion and industrial pollution intensity based on provincial-level data in China. In particular, the moderating effects of industrial ownership on the nexus are explored. A theoretical framework incorporating resource dependence theory, the resource-based view and institutional theory is constructed, and panel data estimations are utilized to test the hypotheses. The results from the regression analysis show that factor market distortion is positively related to the intensity of industrial pollution, and industrial ownership moderates this relationship. Foreign ownership and public ownership can alleviate the environmental deterioration effect due to factor market distortion. Academic and practical implications for sustainability and cleaner production are presented at the end of the paper.