Impact of Environmental Regulation on Urban Industrial Structure Upgrading

Within the broader context of China's industrial structural transformation, the spillover effects of environmental regulations on urban industrial structure upgrading have gained increasing attention. This study uses panel data from 260 prefecture-level cities in China from 2006 to 2020, applying the entropy weight method and the ratio method to quantitatively analyze the levels of environmental regulation and industrial structure upgrading. The findings are as follows: (1) Temporal Analysis: Both formal and informal environmental regulations exhibit an upward trend, reflecting growing societal concern for environmental protection and strengthened government policies. Although informal environmental regulations have grown rapidly, their scores remain lower than those of formal regulations, suggesting a gap between public environmental awareness and government action. Industrial structure upgrading shows an overall upward trend, with more significant progress after 2012, likely due to the introduction of more stringent environmental protection policies. (2) Spatial Analysis: Formal environmental regulations initially declined before increasing, likely influenced by regional economic development variations and differences in policy enforcement. The overall level of informal environmental regulations has risen, particularly in medium- and low-level cities, reflecting regional disparities in environmental awareness. The spatial evolution of industrial structure upgrading aligns with these temporal trends, showcasing regional policy coordination and the complementarity of industrial structures across regions. (3) Spatial Spillover Effects of Environmental Regulations: Environmental regulations exert significant positive spatial effects on industrial structure upgrading, indicating that regulations in one region positively influence both local and neighboring areas. The presence of spatial spillover effects highlights the crucial role of environmental regulations in promoting industrial structure upgrading. Both the direct and indirect effects of formal and informal environmental regulations are significant, although the positive spatial spillover diminishes with distance, likely due to higher information transmission and collaboration costs. Marginal Contributions to Existing Literature: First, this study addresses a research gap regarding the impact of urban environmental regulations on industrial structure upgrading, offering new theoretical and practical insights for sustainable urban development and industrial optimization. Second, it broadens the research perspective by examining the roles of both formal and informal environmental regulations. Lastly, it challenges traditional linear assumptions by exploring the nonlinear relationship between environmental regulations and industrial structure upgrading using bivariate spatial correlation. Based on these findings, it is recommended that cities enhance the intensity and effectiveness of environmental regulations, support medium- and low-level cities in their development transitions, and promote industrial structure upgrading through increased inter-city cooperation and mutual assistance.