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Mathematical Problems in Engineering
Volume 2016 (2016), Article ID 2405624, 10 pages
Research Article

How Does Environmental Regulation Affect Industrial Transformation? A Study Based on the Methodology of Policy Simulation

1School of Management Science and Engineering, Dongbei University of Finance and Economics, Dalian 116025, China
2School of Economics and Management, Tsinghua University, Beijing 100084, China
3Lubar School of Business, University of Wisconsin–Milwaukee, Milwaukee, WI 53211, USA

Received 28 September 2015; Revised 30 January 2016; Accepted 14 February 2016

Academic Editor: Fabio Tramontana

Copyright © 2016 Wei Liu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


The difference of factor input structure determines different response to environmental regulation. This paper constructs a theoretical model including environmental regulation, factor input structure, and industrial transformation and conducts a policy simulation based on the difference of influencing mechanism of environmental regulation considering industrial heterogeneity. The findings show that the impact of environmental regulation on industrial transformation presents comparison of distortion effect of resource allocation and technology effect. Environmental regulation will promote industrial transformation when technology effect of environmental regulation is stronger than distortion effect of resource allocation. Particularly, command-control environmental regulation has a significant incentive effect and spillover effect of technological innovation on cleaning industries, but these effects do not exist in pollution-intensive industries. Command-control environmental regulation promotes industrial transformation. The result of simulation showed that environmental regulation of market incentives is similar to that of command-control.