Regulatory uncertainty and corporate pollution control strategies: an empirical study of the ‘Pay for Permit’ policy in the Tai Lake Basin

Frequent adjustments of environmental regulations usually cause business and investment risks, resulting in significant challenges for policy effectiveness. This paper examines how regulatory uncertainty affects decision making through an empirical study of the ‘Pay for Permit’ policy in the Tai Lake Basin in China. The results show that firms' willingness to decrease pollution is positively influenced by their perceived attitudes, social pressure, and perceived behavioural control. In addition, perceived regulatory uncertainty has significant impacts on social pressure and attitudes toward pollution control. Firms that perceive less regulatory uncertainty are more inclined to adopt antipollution strategies under the Pay for Permit policy. To reduce regulatory uncertainty, China's policy makers should maintain a consistent level of environmental regulations, set clear and reliable long-term policy targets, and strengthen policy enforcement.