Environmental regulation, market competition, and green innovation

Amid rising global environmental challenges, this study explores the potential impact of environmental regulations on  green innovation within firms, focusing on the moderating role of market competition. Utilizing detailed firm-level data from China, our analysis reveals a significant positive effect of environmental regulations on green innovation, notably enhanced under intense market competition conditions. Further robustness checks strongly validate these findings. This research elucidates the interactive relationship between environmental regulations, green innovation, and market competition, supporting the Porter Hypothesis that stringent policies can stimulate green innovation, thereby making ancontribution to the theoretical discourse in environmental economics. Moreover, this study equips policymakers with insights to craft environmental strategies that leverage market competition to simultaneously drive economic growth, technological innovation, and sustainable development.