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How Tax Competition Influences Environmental Pollution——An Analysis from the Pollutant Properties of Spillover

【Authors】
LI Xiangju,ZHAO Na
【WorkUnit】
Xi'an Jiaotong University
【Abstract】

Based on general equilibrium model, we build a theory model of the influence of tax competition on regional environmental pollution and the transmission mechanism. Based on the data of China's 28 provinces from 2007 to 2014, we use dynamic spatial Durbin model and dynamic panel model to verify the theoretical model. The results show that mutuallyspillover effect pollution emission has the characteristic of spatial spillover and that more intensive tax competition may induce more environmental pollution. The reason is that tax competition increases mutually-spillover effect pollution (SO2) and non-spillover effect pollution (solid waste) emissions through local capital flow and local public environmental expenditure. Meanwhile, tax competition decreases mutually-spillover effect pollution (SO2) through neighbor local capital flow and neighbor public environmental expenditure.

JEL:H21, F18

【KeyWords】
Tax Competition, Public Environmental Expenditure, Environmental Pollution, Capital Flow