Spatial effect of environmental regulation on green innovation efficiency: Evidence from prefectural-level cities in China

With slowing economic growth and outstanding environmental problems in China, the government proactively adopting environmental regulation (ER) to promote green technology advancement is the key to solving the dilemma of environment and economy, which is of great significance to the sustainable development, also set an example for other emerging economies. This study probed the impact of ER on the green innovation efficiency (GIE) from the perspective of spatial correlation of the prefecture-level cities in China on the base of theoretical analysis. Firstly, the GIE of the cities was calculated by a special data envelopment analysis (DEA) called super slacks-based measure (Super-SBM) and taking undesirable output in account, and the comprehensive index of the ER was calculated by entropy method. Secondly, this study established a spatial model to test the effect of ER on the GIE in a city, and examined the direct, indirect and total spatial effects. Finally, this study attempted to explain the spatial effect from the perspective of financial ability between enterprises and fiscal decentralization between regions. The empirical results showed as flowing: (1) GIE has declined first and then increased from 2008 to 2015 in China, which is highest in the east and lowest in the central. (2)The spatial spillover effect of ER on the GIE is significant, which was a U-shaped impact that suppressed firstly and then promoted, regardless of local-effect or neighboring-effect. (3) Shorter official tenure and lower enterprises’ profitability have weaken the impact of ER on the GIE. The government should strengthen regional cooperation, improve the public environmental supervision mechanism, and formulate stringent but differentiated ER based on local conditions.