Environmental regulation and manufacturing carbon emissions in China: a new perspective on local government competition

Abstract

Environmental regulation is a crucial way to achieve manufacturing green transformation. However, few studies have explored the spatial spillover effects and regional boundaries of environmental regulation on manufacturing carbon emissions from the perspective of local government competition. Based on the manufacturing panel data of 30 provinces in China from 2007 to 2019, this paper uses the spatial Durbin model to examine the impact mechanisms, spatial spillover effects, regional boundaries and industry heterogeneity of environmental regulation, and local government competition on manufacturing carbon emissions. The results show that (1) environmental regulation suppresses local manufacturing carbon emissions, local government competition increases local manufacturing carbon emissions, but the interaction indicates that local governments tend to top-to-top competition under the constraints of environmental regulation. (2) The spatial spillover effect of environmental regulation has regional boundaries. The regional boundary with a positive spillover effect is 600 km, and the regional boundary with a negative spillover effect is 1600 km. (3) Environmental regulation and local government competition have spatial heterogeneity in the carbon reduction effects of seven-type manufacturing industries. These findings suggest concrete evidence for developing policies for further encouraging green development in manufacturing.