Dual effects of environmental regulation on PM_2.5 pollution: evidence from 280 cities in China

Environmental regulation is considered an important means to solve PM_2.5 pollution. Based on panel data of 280 cities in China from 2003 to 2016, this paper analyzes the dual effects of environmental regulation on PM_2.5 pollution, namely, the direct effect and the indirect effect by three transmission channels of the technological innovation, industrial structure, and foreign direct investment (FDI). The impact of urban heterogeneity on the effects of environmental regulation is then examined. The study found that environmental regulation has a significant negative impact on PM_2.5 pollution. In addition, environmental regulation can indirectly reduce PM_2.5 pollution through technological innovation and industrial structure adjustment. However, it also restrains the environmental spillover effect of FDI, in this way exacerbating PM_2.5 pollution. Urban heterogeneity factors such as geographical location, city size, and resource endowment have an impact on pollution control and the haze reduction effect of environmental regulation. Finally, based on the research conclusion, some suggestions are proposed for strengthening environmental regulation and reducing PM_2.5 pollution.