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Exploring the Role of Heterogeneous Environmental Regulations in Industrial Agglomeration: A Fresh Evidence from China

This paper attempts to analyze the effect of different types of environmental regulations on industrial agglomeration in China. By employing the panel data of 30 provinces in China from 2005 to 2015, this study empirically investigates the effect of the beforehand, intermediate, and afterward environmental regulations on industrial agglomeration and examines the spatial heterogeneity feature in this relationship. The results show that at the provincial level, the beforehand regulations, acting as an entry barrier for potential firms, negatively affect the level of industrial agglomeration, while the intermediate regulations significantly promote industrial agglomeration. As for the regional level, the mechanisms become more complicated and a spatial heterogeneity feature is found. The beforehand and afterward regulations generate opposite effects on regions with increasing and decreasing concentration of pollution-intensive industries, respectively, while the intermediate regulations have no significant effect on either of the two regions.