The impact of environmental regulation and industrial agglomeration on air pollution: on the spatial spillover perspective

Abstract

This paper uses the panel data of 275 prefecture-level cities in China in 2003–2019 and spatial Durbin model to verify the impact of environmental regulation and industrial agglomeration on air pollution. This paper finds that the enforcement intensity of environmental regulations (ER) is not consistent among cities. The effects of strict ER on air pollution in local city are the inverted-U-shape curve. The effects of more stringent ER in adjacent cities j on air pollution in city i are the U-shape curve. The more stringent ER in local city may lead to the decrease in agglomeration of manufacturing sectors (AM), thereby reducing air pollution. The polluting firms may shift production from neighboring cities j with stringent ER to city i with lax ER, thereby leading to the increase in AM, which aggravate air pollution in city i. The more stringent ER in local city i may lead to the increase in agglomeration of productive service industry (AS), thereby reducing air pollution. To avoid the transfer of polluting industrial sectors, the paper suggests that the more stringent implementation of ER should become nationwide actions.