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Air pollution control or economic development? Empirical evidence from enterprises with production restrictions

Feng, Tong; Chen, Xinyu; Ma, Jie; Sun, Yuechi; Du, Huibin; Yao, Ye; Chen, Zhenni; ... Mi, Zhifu; + view all (2023) Air pollution control or economic development? Empirical evidence from enterprises with production restrictions. Journal of Environmental Management , 336 , Article 117611. 10.1016/j.jenvman.2023.117611. Green open access

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Abstract

Production restriction is an environmental regulation adopted in China to curb the air pollution of industrial enterprises. Frequent production restrictions may cause economic losses for enterprises and further hinder their green transformation. Polluting enterprises are faced with the dilemma of choosing environmental protection or economic development. Using panel data on industrial enterprises in China from 2016 to 2019, this paper evaluates the impact of production restrictions on both enterprises' environmental and economic performance with regression models. The results show that production restrictions significantly drop the concentrations of SO2 and NOx emitted from polluting enterprises. Meanwhile, production restrictions have significant negative effects on operating income, financial expenses, net profit, and environmental protection investment. The mechanism analysis reveals that production restrictions mitigate air pollutant concentrations by increasing the number of green patents and improving total factor productivity, which also verifies the Porter hypothesis. However, there is a masking mediating effect of environmental investment, which indicates that the reduction of environmental investment hinders the enterprise's efforts to control air pollution. In addition, heterogeneous analysis shows that the economic shock on microenterprises is larger than that on small enterprises. Implementing production restrictions for microenterprises may be a way to eliminate their backwards production capacity.

Type: Article
Title: Air pollution control or economic development? Empirical evidence from enterprises with production restrictions
Location: England
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jenvman.2023.117611
Publisher version: https://doi.org/10.1016/j.jenvman.2023.117611
Language: English
Additional information: © 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Keywords: Air pollution, Economic performance, Industrial enterprise, Production restrictions
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
URI: https://discovery.ucl.ac.uk/id/eprint/10166222
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