Research on the direct and indirect effects of environmental regulation on environmental pollution: Empirical evidence from 253 prefecture-level cities in China

Abstract Environmental regulation not only has a direct impact on environmental pollution, but also has an indirect impact on air pollution. This paper collects the panel data of 253 prefecture-level cities in China between 2004 and 2016. First, we used the Two-Stage Least Squares (2SLS) method to empirically analyze the direct and indirect effects of environmental regulation on environmental pollution. Second, this paper uses the panel threshold regression model to explore the non-linear effects of environmental regulation on environmental pollution. The results of our analysis indicate: (1) environmental regulation can directly alleviate environmental pollution. Additionally, technology innovation and industrial structure adjustment due to environmental regulation are also conducive to improving China's environmental situation. The direct effects of environmental regulation are greater than the indirect effects; (2) the influence of environmental regulation on environmental pollution has a single threshold characteristic; (3) we also found that some control variables can significantly impact environmental pollution. The innovation of this article is mainly to explore the direct and indirect effects of environmental regulation on environmental pollution.