Do land price variation and environmental regulation improve chemical industrial agglomeration? A regional analysis in China

Abstract China’s governments have a strong control over resources, such as land resources, and determine environmental policies for the nation. As an essential part of the production cost of chemical enterprises, land price and pollution costs play a critical role in location selection. However, whether the current incompletely competitive industrial land market and improving environmental regulations in China would affect chemical industrial agglomeration (CIA) is unclear. This study incorporates the land price variations, environmental regulation, and CIA into one research framework. Calculation methods of industrial land price variation (LPV), environmental regulation (ERI), and CIA are established, to reveal their development level. Furthermore, a geographically and temporally weighted regression (GTWR) model is established to estimate the spatial and temporal impacts of land price variation and environmental regulation on CIA by using a panel data from 2007 to 2015. The results show significant spatial differences in the impacts of land price variation and environmental regulation on CIA between cities. The majority of the impacts of land price variation and environmental regulation on CIA are negative. However, the temporal change in the impacts are not as significant as the spatial change. Other control variables, namely, free trade, natural resources, and highway density, have a positive impact on CIA.