Can urban spatial structure adjustment mitigate air pollution effect of economic agglomeration? New evidence from the Yangtze River Delta region, China.

With rapid urbanization, the economic agglomeration within cities is associated with severe air pollution. Urban spatial structure adjustment has been recognized as an effective strategy for improving air quality. However, the research on how to mitigate air pollution originating from economic agglomeration through urban spatial structure adjustment is unclear. Therefore, based on panel data for municipal cities in the Yangtze River Delta (YRD) region during 2008-2018, this study empirically tests the transmission mechanisms among economic agglomeration, urban spatial structure, and air pollution. We use the combination of the social network analysis (SNA) and two-stage least squares (2SLS) methods to verify the effect of economic agglomeration on air pollution. Economic agglomeration's indirect effect on air pollution through urban spatial structure is further tested using mediating effect model and cross-section comparisons. When exploiting an exogenous order rank of node city importance for instrument variable (IV), our finding shows that increasing economic agglomeration by 10% increases air pollution by 12%. In addition, in market forces, monocentricity brings about economic agglomeration's pollution effect, while polycentricity leads to agglomeration's environmental benefits improvement. However, a government-led exogenous polycentricity greatly mitigates economic agglomeration's pollution effect, while in cities with monocentricity, agglomeration slightly increases air pollution. Compared with market power, our paper stresses government intervention in promoting urban spatial structure in terms of polycentric development could be more helpful for improving agglomeration's environmental benefits in China's YRD region.