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ORIGINAL RESEARCH
The Impact of Environmental Regulation
on Green Innovation of Environmental Enterprises
in China: The Moderating Effect of R&D
Investment and Government Green Subsidies
1
Institute of Environment and Economics, Faculty of Economics, Liaoning University, Shenyang, China
2
School of Finance and Trade, Faculty of Economics, Liaoning University, Shenyang, China
Submission date: 2023-09-20
Final revision date: 2024-02-06
Acceptance date: 2024-03-05
Online publication date: 2024-06-19
Publication date: 2025-01-02
Corresponding author
Pol. J. Environ. Stud. 2025;34(1):447-461
KEYWORDS
environmental regulationenvironmental industriesgreen innovationR&D investmentgovernment green subsidy
TOPICS
ABSTRACT
The implementation of the New Environmental Protection Law (NEPL) in 2015 is a fundamental
and effective way to strengthen environmental governance in China since the original version was
released in 1989. This study explores whether environmental regulations affect the green innovations of
environmental enterprises in China by treating the implementation of the New Environmental Protection
Law (NEPL) as a quasi-natural experiment. Using green patent data from 419 A-share listed enterprises
from 2012 to 2021, we find that the implementation of the NEPL increases the number of both green
invention patent applications and green utility model patent applications in environmental industries.
In addition, there is an accelerating effect because of sufficient R&D investment and a crowding-out
effect because of excessive government subsidies. The research results also show that green patents of
state-owned enterprises, large enterprises, and enterprises located in areas with strong environmental
governance are significantly increased. These findings provide theoretical and empirical basics for
the authorities to formulate more targeted policies to motivate innovations in environmental enterprises.
CONFLICT OF INTEREST
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
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