Environmental regulation, green technological innovation, and eco-efficiency: The case of Yangtze river economic belt in China

Abstract The contradiction between economic development and environmental protection has become a major concern in many developing countries. To resolve environmental issues, political and technical measures must be considered. However, because of geographical, climatic, and economic differences, ecological issues need to be resolved at the regional level. This study proposes a complex eco-efficiency (EE) system composed of multidimensional components with entropy flows for an economic region, the Yangtze River Economic Belt, in China. There were distinct disparities of eco-efficiency in urban cluster, with the higher efficiency in the central cities and the lower efficiency in the satellite cities. Based on the periodic characteristics of eco-efficiency, two distinct periods, 2008–2012 and 2013–2016, were found. The relationships among environmental regulation (ER), green technological innovation (GTI), and EE varied in different regions and periods because of the “innovative compensation”, “compliance cost”, and “energy rebound” effects. When GTI efficiently improved the EE, inappropriate ER weakened the marginal benefits of GTI. When an “energy rebound effect” occurred, moderate ER was found to assist in reducing the harmful influence of GTI. A “race to the top” phenomenon was found to be more likely in developed areas, while a “race to the bottom” effect was found in the western urban clusters. Differentiated sustainable environmental policies of integrating institutional and free-market approaches are provided.