ABSTRACT
The Chinese government has implemented environmental regulations to address the deterioration of air quality associated with rapid industrialization. However, there is no consensus on whether environmental regulations are beneficial to environmental performance. The technical challenges related to endogeneity and spatial correlation may bias the estimation of the emission reduction effect of regulations. In this study, we comprehensively evaluate the environmental performance of sulfur dioxide regulations in Chinese cities using a novel stochastic frontier model that introduces the single control function to correct estimation errors caused by spatial spillovers and endogeneity. Our analysis emphasizes that insufficient resolution of endogeneity or spatial spillovers may lead to underestimation or neglect of the environmental performance improvements achieved by these regulations. On the contrary, our revised research results indicate that regulations aimed at reducing sulfur dioxide emissions not only successfully control sulfur dioxide emissions, but also have a positive impact on reducing carbon emissions. In addition, we conduct in-depth research on the mechanisms by which environmental regulations improve performance by stimulating green technology innovation and promoting industrial structure upgrading. Based on our research findings, we propose policy recommendations to establish a city cooperation mechanism of technology exchange to achieve synergistic emission reduction and strengthen regional factor circulation.
