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Numerous studies have examined the correlation between economic growth and air pollution, but few focuses on the nexus between environmental regulation and <2.5 μm (PM 2.5) fine particle matter. Using Spatial Durbin Model (SDM) and Spatial Two-stage Least Squares (2SLS) methods to analyze 277 Chinese cities over the period 2002–2010, this paper finds inverted U-shaped relationships between PM 2.5 concentration and formal/informal environmental regulations for the whole and eastern and western regions. By removing the depression year of 2008, regulation effect on pollution strengthened, indicating that the main task for local governments in crisis is to avoid GDP decline rather than official promotion. Further, green technological innovation and industrial structure optimization induced by environmental regulation is shown to be beneficial for haze pollution mitigation. Some policy recommendations are proposed in conclusion. • The Spatial Models are used to examine the effect of regulation on the PM 2.5 of 277 Chinese cities during 2002–2010. • An inverted U-shaped relationship is found for the nexus. • Eastern and western China generally has an inverted U-shaped relationship. • Technical innovation and industrial structure are confirmed to be important mechanisms. [ABSTRACT FROM AUTHOR]