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Environmental regulation, factor flow, and resource misallocation.

Qiangyi Li1, Xiaoyu Wu2, Yangqing Liu2

  • 1School of Economics and Management, Guangxi Normal University, Guilin, 541006, China; Key Laboratory of Digital Empowerment Economic Development, Guangxi Normal University, Education Department of Guangxi Zhuang Autonomous Region, Guilin, 541006, China; Development Institute of Zhujiang-Xijiang Economic Zone, Guangxi Normal University, Guilin, 541004, China.

Journal of Environmental Management
|December 10, 2024
PubMed
Summary
This summary is machine-generated.

China's environmental regulation significantly reduces manufacturing resource misallocation. This policy promotes efficient factor allocation and industrial upgrading through factor mobility and market competition.

Keywords:
Environmental regulationFactor flowResource misallocation

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Area of Science:

  • Environmental Economics
  • Industrial Organization
  • Public Policy

Background:

  • China's commitment to international environmental protection amid climate change.
  • The role of industrial enterprises in driving green development.
  • Government supervision of green production influences factor allocation.

Purpose of the Study:

  • To construct a theoretical framework on environmental regulation's impact on manufacturing resource misallocation.
  • To empirically analyze the relationship using micro-level data.
  • To identify the mechanisms and heterogeneity of this impact.

Main Methods:

  • Development of a theoretical analytical framework.
  • Calculation of resource misallocation using micro panel data from 235 Chinese prefecture-level cities.
  • Analysis of mechanisms (factor flow, survival of the fittest) and heterogeneity (regional, industrial).

Main Results:

  • Increased environmental regulation intensity significantly reduced resource misallocation.
  • Environmental regulation alleviates misallocation via factor flow and survival of the fittest effects.
  • A prominent "mismatch-removing" impact was observed in eastern/central regions, highly industrialized cities, and pollution-intensive industries.

Conclusions:

  • Environmental regulation is an effective tool for optimizing resource allocation at the city-industry level.
  • Strengthening government oversight and promoting orderly factor flow are recommended.
  • The findings provide theoretical and empirical support for policy interventions.