The effectiveness of smart city policy on pollution reduction in China: new evidence from a quasi-natural experiment

Based on panel data of 285 prefecture-level and above cities in China from 2003 to 2020, this study has explored the impacts of smart city policy (SCP) on environmental pollution by utilizing the difference-in-differences (DID) model and its derived models. The results indicate that SCP can significantly reduce environmental pollution, and this conclusion still holds after passing numerous robustness tests, such as the propensity-score-matching difference-in-differences (PSM-DID) test, the placebo test, all independent variables lagging one period test, the policy interference test, and the instrument variable (IV) test. Moreover, the heterogeneity analysis shows that the effect of reducing environmental pollution of SCP is heterogeneous. Furthermore, the results of the spatial difference-in-differences (SDID) model show that SCP has a "beggar-thy-neighbor" effect among the pilot cities, and there is no spillover effect of SCP on pollution reduction in neighboring non-pilot cities. Finally, the analysis of moderating effect reflects that the government intervention plays a negative inhibition role in the process of SCP affecting environmental pollution, while the market competition plays a positive catalytic role in the process of SCP reducing environmental pollution.