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Pollution or innovation? How enterprises react to air pollution under perfect information
Yuting Sun1, Hanhui Hu1, Gang Jin2
1School of Economics and Management, Southeast University, Nanjing, Jiangsu 211189, China..
China's real-time air quality disclosure program boosted enterprise innovation in response to pollution. This information initiative spurred companies to innovate, with varied effects across different business types.
Area of Science:
- Environmental Economics
- Innovation Studies
- Public Policy
Background:
- China implemented a nationwide real-time air quality monitoring and disclosure program from 2013-2015.
- This program made air quality data publicly available for prefecture-level cities.
Purpose of the Study:
- To investigate how enterprises' innovation responses to air pollution changed before and after the information disclosure program.
- To analyze the heterogeneity of enterprise responses based on type.
- To explore the mechanisms through which the program influences innovation.
Main Methods:
- Utilized a natural experiment design based on China's air quality information program.
- Analyzed data from Chinese listed companies in 289 prefecture-level cities (2011-2016).
- Employed econometric analysis to assess the impact of the program on enterprise innovation.
Main Results:
- The information program significantly encouraged enterprise innovation to react to air pollution.
- Heterogeneity was observed in the innovation response across different types of enterprises.
- Stimulation of innovation occurred via enhanced government environmental motivation and increased public engagement.
Conclusions:
- Publicly disclosed air quality information is a critical driver of enterprise innovation.
- Environmental regulation effectiveness can be significantly improved through transparency and information dissemination.
- The study underscores the overlooked role of information in environmental governance.
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