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This paper examines a causal relationship between the opening of a city's subway system and its air quality by exploiting daily data on prefecture-level cities in China from 2000 to 2012. Using multi-period difference in differences (DID) method, we find that air quality can be significantly improved following a subway system opening. Robustness tests support the fundamental empirical results. Heterogeneity analysis shows that cities in the eastern and western regions and cities with higher GDP or cities with larger population experience greater and more significant reduction in pollution. We further find that the air pollution continues to decrease with the extension and prolonged operating period of a subway system. Mechanism analysis shows that the resulted air pollution index (API) reduction is due to the substitution effect of taxi.

This study calculates the green investment level of each province in China and objectively estimates the provincial environmental regulation level from the perspective of the government to examine the effectiveness and impact of the government's environmental protection policy on the environmental regulation level. The carbon emission trading pilot policy is determined through a quasi-natural experiment difference in difference model to examine the impact and assess the effectiveness of green environmental protection policies on the environmental regulation level empirically. Results show that (i) the green investment level of the carbon emission trading pilot provinces is significantly lower than that of other nonpilot provinces after 2013, and (ii) the introduction of environmental protection policies has reduced the government's green investment level by approximately 8%. These findings confirm that environmental regulation policies play a significant role in promoting the environmental regulation level. Further mechanism analysis shows that environmental regulation policies influence this level through carbon dioxide emissions. This study provides a reference for environmental regulation policy making.