Does Green Technology Innovation Improve Regional Environmental Quality?

As environmental issues are increasingly serious,green technology innovation has emerged as a significant approach to achieve economic efficiency and environmental sustainability.Despite the substantial number of patent application and licensing for green technologies in China,the application of green technologies is limited due to the high R&D cost and the public good attributes of environment.The casual relationship between green technology innovation and environmental quality remains to be verified.Since environmental regulation is a direct means of controlling pollution,it is of great significance to study whether environmental regulation promotes green technology innovation to better play the role in energy conservation and emission reduction.This paper studies the casual relationship between green technology innovation and environmental quality with both theoretical and empirical approaches.The theoretical part first analyzes the possible internal mechanism of green technology innovation improving the environmental quality,and secondly constructs a theoretical model studying how environmental regulation affecting companies' adoption of green technology innovation in the monopolistic market.For the empirical study,the data is based on the panel data of 285 cities during the year of 2003-2015 from the China Urban Statistical Yearbook and the patent database,and we use the fixed-effect model and the instrument-varnable regression method to empirically test the theoretical hypothesis.The empirical results indicate that the enhancement of regional green technology innovation improve the regional environmental quality.With more intensive environmental regulation,the application of green technology innovation will increase,and thus better improve the environmental quality.Additionally,the study also shows that the reform of decentralization at the provincial level,the development of private-owned economic and export-oriented economic,financial development,and urbanization all have the positive impact on the casual relationship between green technology innovation and environmental quality.The paper contributes to the literature with the reference value for the improvement of environment in urban areas.