Can informal environmental regulation promote industrial structure upgrading? Evidence from China

Using Chinese provincial data from 2000 to 2016, this paper investigates the effect of informal environmental regulation (IER) on industrial structure upgrading. We find that IER in the form of environmental media coverage acts as an external binding force and spurs the upgrading of industrial structure through increasing the dual pressure of local government supervision and public opinion. A mechanism test shows that IER can boost regional innovation, thereby promoting the upgrading of industrial structure. Moreover, the positive association between IER and industrial structure upgrading is more prominent in regions with stronger environmental law enforcement and higher public environmental awareness. We also document that IER has a significant informational spatial-diffusion effect and has characteristics of a double-threshold effect. Overall, our results highlight that it is necessary to establish a system for disclosing environmental information and to improve the mechanism whereby independent third parties such as the media participate in environmental governance.