The heterogeneous impact of environmental regulation on urban green scale economy: an empirical analysis based on city-level panel data in China

With continued expansions of scale, the Chinese cities are facing unprecedented economic, environmental, and energy sustainability challenges. The aim of this paper is to examine the heterogeneous impact of environmental regulation (ER) on urban green scale economy (GSEC), by combining the global Malmquist index approach, spatial econometric model, panel quantile regression model (QRPD), and the city-level panel data from 2004 to 2018. The estimation results show that (1) from 2004 to 2018, the growth rate of GSEC fluctuates sharply, and the values of GSEC are less than 1 in many years. This indicates that GSEC is far from efficient and needs to be improved in the future; (2) the results of the spatial econometric model show that GSEC has a U-shaped relationship with the level of ER. Furthermore, the estimation results of QRPD verify the above conclusions and show that there is distinct heterogeneity of ER on GSEC at different quantiles and regional cities; (3) the results further indicate that other vital control variables have a significant and heterogeneous effect on GSEC. Therefore, the focus of future work should be adapted to local conditions. Specifically, in the cities with lower-level GSEC, the policymakers should give top priority to break through the U-shaped inflection point as soon as possible and help enterprises to achieve pollution reduction by technical and financial subsidies. While in the cities with higher-level GSEC, the government should further strengthen its ER and encourage competition among enterprises by internal technological innovation. In addition, the government should try to avoid the negative effect of the resource curse trap, excessive financial leverage, and race-to-the-bottom phenomenon.

Automated summary

This study examines the impact of environmental regulation on urban green scale economy using various models and city-level panel data. Results indicate that there is a need to improve and increase GSEC, and that the impact of environmental regulation on GSEC exhibits significant heterogeneity.