Urban Environmental Legislation and Green Innovation

Abstract With the panel data of 218 prefecture-level cities from 2003 to 2017, this paper empirically tested whether urban environmental legislation realized Porter Hypothesis(PH) in China. After a series of model estimation and robustness tests, the results show that urban environmental legislation increased the number of local green patents, which means that the weak Porter Hypothesis was established. However, the urban environmental legislation did not lead to an increase in green total factor productivity(GTFP). In other words, the strong version of PH did not hold. Further analysis shows that urban environmental legislation led to the decline of GTFP and the increase of green patents in the west of China, but not in the east and central cities. Besides, the legislation did not promote GTFP improvement through green innovation in the short term, which means it did not realize process compensation.