The Impact of Heterogeneous Environmental Regulations on Location Choices of Pollution-Intensive Firms in China

• Published in: Frontiers in environmental science 2021-12, Vol.9
• Main Authors: Tang, Chenghui, Dou, Jianmin
• Format: Article
• Language: English
• Subjects: border effect; location choice; pollution haven hypothesis; pollution-intensive firms; zero-inflated negative binomial regression
• ISSN: 2296-665X; 2296-665X
• DOI: 10.3389/fenvs.2021.799449

The spatial transfer pattern and dynamic mechanisms of pollution-intensive industries are key issues for national and regional sustainable development. Although previous studies have emphasized the impact of environmental regulations on the transfer of pollution industries, there is a lack of firm-level analysis of the combined effects of different types of environmental regulations and other factors on them, which has led to the pollution haven hypothesis remaining contested. In order to provide micro evidence to test the pollution haven hypothesis, this paper reveals the temporal and spatial evolution of pollution-intensive foreign firms’ distribution in China, and explores the impact of heterogeneous environmental regulations on the location choices by using spatial analysis and zero-inflated negative binomial regression. The empirical results were as follows: Firstly, pollution-intensive foreign firms were highly concentrated in the eastern developed region and have a strong path dependency in China. Secondly, environmental regulations, especially the market-based environmental regulation, had a significant negative impact on the location choices of pollution-intensive foreign firms. Thirdly, the spatial distribution of pollution-intensive foreign firms was strongly influenced by new economic and geographic factors. Fourthly, pollution-intensive foreign firms have a significant pollution border effects in developed regions but not in economically less-developed regions due to transportation costs. The governments are expected to adopt heterogeneous environmental regulations based on the level of regional economic development to avoid the pollution haven phenomenon, thus achieving a sustainable development.