We find that the effectiveness of environmental regulations is contingent on local banking competition in China. Specifically, firms located in cities with more concentrated banking markets are less likely to reduce their SO2 emissions or increase investment in abatement equipment when faced...

We study the equilibrium effects of innovation subsidies that reduce firms’ innovation costs. We consider a monopolistic competition model with firm heterogeneity in innovation capabilities and an industry-level constraint of a production factor. The subsidy would change product market...