Based on the panel data of 177 prefecture-level cities from 2005 to 2016 in China, this study establishes spatial panel models to analyze the impact of environmental regulation (ER) on the green technology innovation which is measured by green patents application. Firstly, the local effect of environmental regulation on green technology innovation is inhibition, implying compliance cost effect of ER on green technology investment. The neighbouring spatial effect of ER on green technology is U-shaped of first inhibition and then promotion. Secondly, The local effect is mainly affected by economic development level of the city, while the neighboring effect relates to Chinese fiscal decentralization. Thirdly, the neighbouring effect of ER on green technology innovation is the U-shaped only ranging from 200km to 700km. Fourthly, ER directly inhibits local and neighbouring regions green invention patents application, while the local and neighboring spatial effects of environmental regulation on the green utility model patents were both U-shaped of first suppression and then promotion.
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