Does Market Competition Reduce Corporate Environmental Investment? Evidence From China's Anti‐Monopoly Law

This study examines whether stronger competition supports or constrains corporate environmental responsibility, using China's 2008 Anti‐Monopoly Law as a quasi‐natural experiment. Applying a difference‐in‐differences design to Chinese A‐share listed firms in heavily polluting industries from 2006 to 2019, we find that firms with high preexisting monopoly power significantly reduced environmental investment after the law's implementation. The evidence is consistent with three mechanisms: intensified competition redirected resources toward market defence, reduced monopoly rents weakened the financial slack available for environmental initiatives and greater antitrust scrutiny discouraged interfirm environmental cooperation. The negative effect is stronger in weaker institutional environments and among more vulnerable firms, and the law is also associated with reduced environmental disclosure. These findings reveal an unintended sustainability consequence of antitrust enforcement and suggest that competition policy should be coordinated with clearer environmental exemptions, targeted green finance and institutional safeguards that help firms maintain environmental commitments under competitive pressure.