This study investigates how industrial dynamics alter pollution intensity in Chinese cities. Conventionally, industrial dynamics can improve the environmental performance through introducing the cleaner sectors to supersede the dirtier ones. However, we argue that this is not always the case since the route of industrial dynamics is diverse and highly region-specific. We consider the route of industrial dynamics as a synergy of path dependence and path breaking, then proposing a theoretical framework. Industrial dynamics exactly become endogenous in this framework. Using data covering 257 prefectures in China during 2003–2011, this study constructs a model to examine the framework, specifically the indirect effects of path dependence/breaking. The results show that both path dependence and path breaking affect the firm entry/exit, then generating different effects on pollution intensity. Path dependence reduces pollution intensity through the knowledge accumulation and the transformation of SOEs. Path breaking increases the pollution intensity due to the GDP-worship subsidies. However, path breaking out of the utilization of external linkages is still consequential for pollution-intensive sectors. It will introduce new firms with better environmental performance as well as upgrade pre-existing firms environmentally. Our findings may offer insights into the decision-making for urban sustainable development.
He, C., Mao, X., & Zhu, X. (2018). Industrial dynamics and environmental performance in urban China. Journal of Cleaner Production, 195, 1512–1522. https://doi.org/10.1016/j.jclepro.2017.10.142