The Effect of Chinese Real-time Air Pollution Monitoring on Corporate Social Responsibility: A Spatial Difference-in-difference Analysis

This paper investigates the impacts of the Real-time Air Pollution Monitoring (RAPM) policy on Corporate Social Responsibility (CSR) at the city level using spatial difference-in-difference (SDID) models. Our findings reveal that while the RAPM policy does not significantly impact the average CSR scores in cities under RAPM, it leads to a significant decline in CSR scores for neighboring untreated cities. This suggests that firms in treated cities may respond to the policy by altering their supply chains or relocating manufacturing to areas without stringent environmental regulations, inadvertently fostering CSR deteriorating practices in cities without RAPM. These results highlight the spatial spillover effects of environmental policies and underscore the importance of considering potential unintended consequences beyond the immediate areas of implementation.