To Be or Not to Be : Government Environmental Attention and Withdrawal of Polluting Firms in China

Government environmental attention is the premise for countries to join the agenda setting of environmental governance. Under the framework of heterogeneous firm theory, this study investigates the influence and mechanism of local government environmental attention on pollution governance in terms of firm exit. Benchmark analysis indicates that local government attention for environment can accelerate the withdrawal of polluting firms. The mechanism analysis shows that raising the severity of environmental regulations imposed on polluting firms, reducing government subsidies obtained by the polluting firms, and increasing technological innovation of such firms are the impact ways for local government environmental attention to accelerate the withdrawal of polluting firms. Expansion analysis shows that the influence of government environmental attention on the exit of polluting firms will weaken as regional market concentration, fiscal decentralization and official corruption increase. This study provides a scientific basis for further enhancing the system of environmental policy