The effects of environmental regulation on the industrial location of China’s manufacturing

Significant regional differences in Chinese environmental regulation stringency will affect regional location of China’s manufacturing. With reference to the classical trade model of interaction between industries and provinces and data from China’s manufacturing, we explore the impact of environmental regulations on the location of China’s manufacturing. The empirical results show that the environmental regulation has influence on the location of China’s manufacturing, and manufacturing tends to move to loosely regulated provinces from strictly regulated ones considering environmental regulation constraints. Provinces with easy environmental regulation efforts are more likely to attract polluting enterprises and become pollution haven.

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