In this study, we use a composite index named as Environmental Treatment Index (REGSTR) as a proxy of regulatory stringency in each province which includes the percentage of industrial waste water meeting the discharge limits, the percentage of industrial smoke and dust emission from boilers meeting the discharge limits, the comprehensive utilization
rate of industrial solid waste, innocent treatment rate of urban garbage, repeating utilization rate of industrial water, the proportion of GDP in investment of environmental pollution treatment and the share of environmental protection industry in GDP.