When pursuing regional pollution control through environmental regulation in China, the region may face new problems such as the relocation of polluting industrial facilities and redirection of investment to other fi elds. In order to test the effectiveness of relevant regulatory measures, this paper examines the relationship between environmental regulation and green technological innovation based on provincial panel data. A major fi nding is that collecting pollutant discharge fees and increasing government spending on environmental protection are more effective than meting out environmental administrative punishment and promulgating local environmental rules and regulations. Therefore, the key to promote green technological innovation through environmental regulation lies in the choice of regulatory tools. Generally, fi nancial instruments, taxes, fees and other market-based environmental regulation tools are more suitable for the specifi c conditions in China. Test of the mediating effect shows that pollutant discharge fees and government spending on environmental protection can force enterprises to step up R&D efforts, and thus boost green technological innovation, and that the role of these two tools in pushing for green technological innovation exhibits a threshold effect as their influence grows from weak to strong and from insignificant to significant. It is noteworthy that severe environmental administrative punishment hinders green technological innovation and that local environmental rules and regulations have no significant impact on green technological innovation regardless of their intensity. In order to strengthen environmental governance and promote green technological innovation, it is necessary to build a market-based environmental regulation system, lay stress on relevant top-level design, and appropriately increase the intensity of environmental regulation.
Keywords: environmental regulation, green technological innovation, mediating effect, threshold effect
China Finance and Economic Review
Volume 8 Number 3 Autumn 2019.P96