The environmental consequences of industrial agglomeration: New evidence from city-level data in China

In the context of sustainable development, environmental policies increasingly focus on reducing carbon emissions worldwide. Industrial agglomeration (IAGG) has emerged as a potential factor in achieving this objective by reducing carbon emissions and improving air quality. This study examines the direct and indirect impacts, spatial dynamics, and policy impacts of industrial agglomeration on air pollution levels. Panel data from 278 cities in China between 2011 and 2020 are utilized to investigate the potential of industrial agglomeration to reduce air pollution. Multiple regression models are employed, these models explore the mechanisms through which industrial agglomeration can have a positive effect on air pollution, highlighting economic growth, inclusive finance, digital economy and technological innovation as crucial factors. The study also investigates the spatial spillover effects of industrial agglomeration, finding that the concentration ratio and specialization of neighbouring cities significantly contribute to local air pollution levels. Furthermore, this contribution increases progressively with distance. The study investigates the spillover effects of environmental pollution and industrial agglomeration-related policies on PM_2.5 concentration, concluding that such spillover effects lead to a decrease in PM_2.5 concentration in neighbouring locations.