Local-neighborhood effects of different environmental regulations on green innovation: evidence from prefecture level cities of China

Green innovation is the key to solve increasingly serious environmental problems. Previous studies mainly focus on the effects of environmental regulations (ERs) on local green innovation while little research has paid attention to the effects of ERs in neighborhood, and the impact mechanism remains unclear. Actually, the green innovation in a region may depend on the superposition effects of local and neighboring ERs. This study proposes a theoretical framework of local-neighborhood effects of ERs on green innovation, and empirically tests the effects and mechanisms based on an examination of 274 prefecture level cities of China, with different ERs and regions taken into consideration. The results show regional differences in the local-neighborhood effects of different ERs on green innovation and further identify the optimum regional ERs intensity. Moreover, it is also discovered that areas with high intensity of ERs will foster the regional transfer of industries and human capital, and further affect green innovation in neighboring areas. Both command and control regulation and market-based regulation restrain green innovation in neighborhood through industrial transfer with the peak at 400 and 600 km economic urban circles, respectively. And the human capital is found significantly negative in neighborhood effect of market-based regulation within the 600 km scope. This study fills a gap in the literature of local-neighborhood effects of different ERs on green innovation, which is an extending of Porter Hypothesis and will be of great significance for regionally coordinated green innovation promotion.