High-speed rail and firms' environmental performance: empirical evidence from China.

ABSTRACT

Developing countries are struggling to balance the economic development and environment protection. This paper examines the impact of high-speed rail (HSR) on firm-level environmental performance in China. Using the staggered expansion of China's passenger-dedicated HSR and the panel data of Chinese manufacturing firm-level data from 2002 to 2012, we find that firms exhibit a lower level of chemical oxygen demand (COD) emissions after the opening of HSR. The average geographical slope of city is used as an instrumental variable to address the potential endogeneity problem of the HSR variable. Furthermore, the reduction effect of HSR introduction on firms' COD emission intensity is more pronounced for firms that located in eastern regions as well as technology-intensive and labor-intensive firms. Agglomeration economies, scale effects, and technological innovation are three plausible channels that allow HSR to promote firm environmental performance. Our paper provides new insights into the impacts of introduction of HSR on firm environmental performance and the development of green city.