Can command-and-control regulation reduce carbon emissions? Evidence from China

Abstract

Command-and-control environmental regulation (CMCER) serves as a powerful tool for developing countries to manage carbon output. However, controversy persists over the efficacy of environmental regulations, potentially due to the literature's limited consideration of the complex and possibly non-linear relationship between CMCER and carbon emissions. To address this issue, we integrate previous studies that highlight the complicated interactions between economic, political, and social processes and empirically examine an inverted U-shape relationship between CMCER and carbon emissions. Analyses are conducted using panel data from 280 prefecture-level cities in China, covering the period from 2006 to 2020, and employing the theory-driven STIRPAT model and threshold regression. Results reveal a reversed U-shaped connection of CMCER and carbon emissions, and the effect of CMCER has reached a phase of suppression. This study also identifies a singular threshold effect, indicating that the full potential of CMCER to reduce carbon emissions remains unexploited. Furthermore, CMCER is found to indirectly mitigate carbon emissions by upgrading industrial structures, promoting cleaner energy consumption, fostering low-carbon technological innovation, and limiting foreign direct investment. The non-linear impact of CMCER varies by region, city size, and the type of urban development. These findings highlight the importance of adapting environmental regulation policies to local contexts instead of a one-size-fits-all strategy for effective carbon emission mitigation.