Central vertical regulation and urban environment-biased technological progress: evidence from China

Technological progress in favor of cleaner production is the key to achieving low-carbon development in China. The Ambient Air Quality Standard (AAQS) issued by the Ministry of Environmental Protection (MEP) in 2012 was an essential policy for the central government to implement vertical environmental regulation. Therefore, based on the city-level panel data, this paper examines the impact of the central vertical regulation on urban environment-biased technological progress using the difference-in-differences method. The results show that central vertical regulation can significantly promote urban environment-friendly technological progress. Heterogeneity analysis shows that the driving effect of the central vertical regulation on urban environment-friendly technological progress is more obvious in the eastern regions, non-resource-based cities, large cities, and high-grade cities. Moreover, the channel analysis shows that the central vertical regulation mainly boosts the urban environmental technology progress toward cleaner production by strengthening government environmental governance, raising public environmental concern, and improving energy structure. The findings provide policy implications for evaluating the effectiveness of macro-environmental policy and promoting green sustainable development.