Understanding Policy Synergy and Capacity Utilization Through a Dual-Incentive Perspective: Evidence from Cleaner Production Regulation in China

This study examined how policy synergy in cleaner production regulation affects firms’ capacity utilization in China. Using firm-level panel data, this study empirically examined the impact of policy synergy in cleaner production regulation—operationalized through the coordination between the incentive and constraint instruments—on the enterprises’ capacity utilization (CU). The results showed that higher levels of policy synergy significantly enhanced the capacity utilization, with stronger effects observed in state-owned enterprises, firms in competitive industries, high-R&D investment firms, and regions with lower public environmental attention. The mechanism analysis indicated that policy synergy improved capacity utilization primarily by enhancing the resource allocation efficiency. Further, the analyst attention positively moderated this relationship, amplifying the effect of coordinated policy instruments. Overall, this study clarifies the mechanisms and boundary conditions through which the policy synergy under a dual-incentive governance framework affects the firms’ capacity utilization, thereby offering theoretical insights into policy coordination and practical guidance for the design of cleaner production regulation.