Abstract: Green technology innovation is a main approach for enterprises to increase efficiency and reduce emissions. Due to the imbalance between the cost and return of green technology innovation, the greening of technological advances can hardly be realized by market mechanism alone. Hence, government incentives are of particular importance in encouraging corporate green technology innovation. Under the Chinese decentralized system featured by political centralization and economic decentralization, when the central government transfers lots of environmental power to lower administrative units, local departments tend to distort or partially execute national environmental policies for the sake of profit maximization. Moreover, in view of the diversity in the management of environmental affairs, different types of environmental power transferred to local governments vary in their impacts on green technology innovation. Furthermore, while improving the level of local green technology innovation, environmental decentralization shows significant spatial spill-over effects. Existing research rarely touches upon the influence of environmental decentralization on the local area and adjacent areas. Therefore, drawing on provincial panel data between 2003 and 2017, the undesired output EBM model is employed to measure the level of green technology innovation and introduced the green technology innovation index into the dynamic spatial Durbin model to analyze the impacts of environmental decentralization and local government competition on the “local-adjacent” effects of green technology innovation. The research findings are listed below. (1)Green technology innovation has significant route reliance, spatial agglomeration and strategic competition effect in neighboring areas. The change in the influence of environmental decentralization on green technology innovation showed U-shaped fluctuations. Currently the provincial decentralization level is generally lower than the threshold. (2)Administrative decentralization has a nonlinear influence on green technology innovation, supervisory decentralization has a negative influence and the influence of monitoring decentralization is not significant. It was found from examining the interactivity between decentralization and competition that as supervisory power is transferred to local governments, the “race-to-the-bottom” competition between them will be intensified, while the expansion of environmental administrative decentralization contributes to the formation of a healthier competition mechanism. This indicates while reforming environmental administration in China, the central government should incrementally expand the scope of responsibilities for the environmental administration of local governments and shift up the supervisory and monitoring decentralization of environmental power, in order to ensure the authority and authenticity of monitoring results. (3) Environmental decentralization varies in their stimulation effects on green technology innovation depending on regions—the effects are stronger in the central and western regions than in the eastern region. Therefore, differentiated strategies of environmental decentralization should be developed for different regions. For the eastern coastal region where environmental government is in better conditions, environmental decentralization can be weakened, while capital and technological support can be strengthened to match the path dependence of green technology innovation in the region. Meanwhile, in the ecologically fragile central and western regions, the central government may reinforce the power of local governments for environmental supervision and intervention so as to construct the ecological framework through the joint efforts of the central government and central and western provinces. An in-depth study is performed on how green technology innovation is affected by local government competition and the diversity of environmental decentralization and conclusions are drawn that can provide reference for designing an effective stimulation and restrictive mechanism to improve the positive influences of decentralization on green technology innovation.

Key words: green technology innovation; dynamic spatial Durbin model; environmental decentralization; local government competition; undesirable output EBM model