Abstract: Based on the data of 278 prefecture-level and above cities from 2007 to 2016, this paper systematically investigates the impact of local government tax competition and environmental regulation strategies on haze pollution by adopting the spatial Durbin model and instrumental variables. The findings indicate that local government tax competition has significantly intensified the local haze pollution, which has a positive spillover effect on the adjacent areas; the strength of the environmental regulation has significant positive effects on local haze prevention and treatment, which has a negative spatial spillover effects on the adjacent areas; the tax competition of the local governments has restrained the haze reduction effect of the environmental regulation policy, which fails the target of guiding the benign tax competition to promote the high quality development of local economy. The findings of further research show that the impact of tax competition and environmental regulation strength on the haze governance in larger and medium-sized cities is significantly lower than that in the small cities, and the effect of haze control of the environmental governance strategy has become more and more significant since the 18th CPC National Congress. Therefore, it is necessary to guide the local government revenue from the race-to-bottom competition to the item-by-item competition, to strengthen the reversed effect of environmental governance policy under full considerations of urban heterogeneity, and to establish a haze prevention and control mechanism among the local governments.

Key words: local government; tax competition; environmental regulation; haze pollution; Spatial Durbin Model