Research on the Effect of the New Environmental Protection Law on the Market Competitiveness of China’s Heavily Polluting Enterprises

Abstract

Based on a difference-in-differences model, this study examines the effect of environmental regulation on the market competitiveness of heavily polluting enterprises, their mechanisms, and the space for effective implementation. Which all listed heavily polluting enterprises between 2010 and 2019 are included as the experimental group, and all other firms in the same industries listed on the Chinese stock market as the control group. The results indicate that environmental regulations have significantly increased the market competitiveness of heavily polluting enterprises in China. Furthermore, China’s New Environmental Protection Law (NEPL) has improved the market competitiveness of heavily polluting enterprises through strategic, flexible mitigation effects. Finally, the NEPL in regions with eastern or non-state enterprises has a significant impact on market competitiveness. The government should further improve laws and regulations for environmental protection, increase environmental regulations, and apply policies based on the differences in heavily polluting enterprises.