Tax Competition, Spatial Effect, and Environmental Pollution: An Empirical Analysis of the GTWR Model

Abstract

This paper draws on the Chinese 31 provincial panel data from 2000 to 2017 and then uses the GTWR model to empirically test the spatial effect of tax competition on regional environmental pollution. The estimated results show that there exists significant spatial heterogeneity of effects of tax competition on regional SO2 discharge and wastewater discharge. In addition, the paper uses the LISA method to measure the spatial correlation pattern of estimated coefficients of the GTWR model, which finds that significant spatial dependence exists on the effects of tax competition on regional environmental pollution. The effects of tax competition on regional SO2 discharge present a 'low-low' spatial correlation pattern. There is a depression effect of impact in the regional spatial pattern, namely, the provinces with smaller impacts are close to each other and gather together in space. The effects of tax competition on regional wastewater discharge present a 'high-high' spatial correlation pattern. There is a highland effect of impact in the regional spatial pattern, namely, the provinces with greater impact are close to each other and gather together in space.