Environmental Regulation And Industrial Performance

As people gradually realize the seriousness of environmental problems,governments are beginning to strengthen environmental regulation to restrain enterprises' pollution behaviors in order to protect the environment.While environmental regulation plays an important role in protecting the environment,it will affect economic development and industrial performance.This issue has aroused great concern at home and abroad.The early view is that environmental regulation will inevitably reduce industrial performance,which is based on the judgment of the rising cost of enterprises.But this view has been widely criticized for has not dynamically considered issues.Then,with the "Potter hypothesis" that environmental regulation can improve industrial performance has been proposed,the relationship between environmental regulation and industrial performance arouses the attention of scholars again.With the deepening of research,the viewpoint that environmental regulation has a complex impact on industrial performance has gradually become the consensus of scholars.In order to make a more comprehensive study of the impact of environmental regulation on China's industrial performance,this paper,based on a comprehensive review of the impact mechanism of environmental regulation on industrial performance,discusses the differences in the impact mechanism of environmental regulation from different perspectives.And combined with the impact mechanism and research perspective to build an analysis framework.Then based on the analysis framework,this paper empirically examines the impact of environmental regulation on the performance of China's manufacturing industry through the data of 26 sample industries in China's manufacturing industry.The main conclusions are as follows:(1)Environmental regulation effects industry performance through three kinds of impact mechanisms.The first is directly affecting corporate performance through costs,and then reduce industry performance.The second is indirectly affecting corporate performance through technological innovation,and thus affecting industrial performance.The effect may be either promoted or hindered.The third is indirectly affecting corporate performance by increasing barriers to entry,and then enhancing industry performance.It is worth noting that the first two kinds of influences are transmitted from the corporate level to the industry level,and the third impact is from the industry level to the corporate level and then back to the industry level.(2)Overall,environmental regulation can influence the performance of China's manufacturing industry through three kinds of impact mechanisms.Environmental regulation can promote the industrial performance of China's manufacturing industry by promoting technological innovation and increasing barriers to entry.However,it still cannot fully offset the negative effects caused by costs.Therefore,the final effect of environmental regulation on Chinese manufacturing industry performance is negative.(3)Environmental regulation has different mechanisms for different pollution degree industries.This paper adopt the method that combining the intensity and the total amount to divide China's manufacturing sample industry into high,medium and low pollution group.At this stage,the cost impact mechanism of environmental regulation is only effective for high-pollution industries.The technological innovation impact mechanism of environmental regulation is effective for high-pollution and medium-pollution industries.The market structure impact mechanism of environmental regulation is only effective for the medium-pollution industry.Although environmental regulation can increase the barriers to entry in high-pollution industries,the increase in barriers to entry of high-pollution industries has no significant impact on their industrial performance.Judging from the final results,environmental regulation has a negative effect on the industrial performance of highly polluting industries and has a positive effect on the industrial performance of polluting industries.(4)Environmental regulation has different influence mechanisms on enterprises with different property rights.This paper classified enterprises into state-owned enterprises and non-state-owned enterprises according to the property rights of the enterprise.At this stage,the cost of environmental regulation and the impact of technological innovation are only effective for the non-state-owned enterprises.Although the ultimate impact of environmental regulation on the performance of companies with different property rights in the industry is less than 0.05%,the impact is in the opposite direction.It has a positive effect on the performance of state-owned enterprises and a negative effect on the performance of non-state-owned enterprises.According to the results of the research,some suggestions are as followed:(1)Designing reasonable environmental regulation to promote technological innovation and eliminate high pollution enterprises.(2)Strengthening the independence of relevant environmental protection institutions to overcome local protectionism and reduce the space for government-enterprise collusion.(3)Strengthening public participation in environmental protection.