Do foreign peers bring green wind? Evidence from China

The role of foreign firms in energy efficiency improvement in developing countries is far from being evident. Using a novel dataset, this paper investigates the energy-type spillover effects of foreign firms on domestic firms. In addition, we examine the heterogeneous relation between different industry categories and industrial pollution degrees. Furthermore, to eliminate the potential bias originating from truncated distribution and inversed causality, we implemented various robustness checks. Derived from those findings a clear policy recommendation can be made. This policy implication is to foster the establishment of foreign firms to profit from the positive energy efficiency spillover effects.