Environmental institutional supply that shapes a green economy: Evidence from Chinese cities

In the toolbox for environmental governance under urban governments, is environmental institutional supply an effective tool to advance the improvement of economic growth quality? This study used data mining and text analysis to obtain the institutional data of 278 cities in China on environmental pollution management and assesses the quality of urban economic growth from the perspective of pollution reduction and total factor productivity improvement. Regression analysis with the temperature inversion in cities as the instrument confirms that environmental institution supply has significantly reduced the PM2.5 emission concentration in China's urban economic growth. Increasing environmental institutional supply has a more salient effect on green transformation in inland cities relative to coastal cities. In a more in-depth discussion, we combined productivity analysis that considering resource and environmental constraints and panel quantile regression and found that, while having a positive effect on cities in the lower quantile of total factor productivity, environmental institutional supply has a negative effect on cities in the higher quantile. Promoting green technological innovation and increasing employment in the field of environmental protection are important channels for environmental institutional supply that shapes a green urban economy.