Does Environmental Regulation Promote Environmental Innovation? An Empirical Study of Cities in China

Abstract

Promoting environmental innovation through environmental regulation is a key measure for cities to reduce environmental pressure; however, the role of environmental regulation in environmental innovation is controversial. This study used the number of environmental patent applications to measure urban environmental innovation and analyzed the role of urban environmental regulation on urban environmental innovation with the help of the spatial Durbin model (SDM). The results showed that: (1) From 2007 to 2017, the number of environmental patent applications in China has grown rapidly, and technologies related to buildings dominated the development of China’s environmental innovation. (2) Although the number of cities participating in environmental innovation was increasing, China’s environmental innovation activities were highly concentrated in a few cities (Beijing, Shenzhen, and Shanghai), showing significant spatial correlation and spatial agglomeration characteristics. (3) Urban environmental regulation had a positive U-shaped relationship with urban environmental innovation capability, which was consistent with what the Porter hypothesis advocates.