Abstract: As the second largest economy in the world, China has achieved world-renowned achievements in its economic development while the environmental pollution problems caused by the development cannot be underestimated. According to the 2018 Environmental Performance Index (EPI) released by Yale University, China’s EPI ranks 120th among the 180 participating countries, and the air quality ranking is particularly low. Environmental pollution damages the image of our country, harms the health of every people, affects social welfare and hinders the sustainable development of the economy. Enterprise eco-technology innovation is an important measure to resolve the contradiction between economic development and environmental pollution. However, eco-innovation has dual positive externalities, so it needs to be stimulated by reasonable and effective environmental regulations. At present, researches on the effect of environmental regulation on enterprise eco-technology innovation have become one of the hottest topics, but scholars mainly consider the direct effect of environmental regulation on enterprise eco-technology innovation based on a single perspective, and ignore the indirect effect of environmental regulation on enterprise eco-technology innovation. The research conclusion on whether and how environmental regulation effects enterprise eco-technology innovation has not yet formed consensus in the academia. Therefore, it is difficult to provide credible evidences for adopting environmental regulations.
In order to realize the “five in one” plan, implement the innovation-driven development strategy, and exert the incentive effect of environmental regulation on the enterprise eco-technology innovation effectively, this paper analyzes the direct impact of environmental regulation on enterprise eco-technology innovation through “compliance cost effect” and “innovation compensation effect”, and analyzes the mechanism that environmental regulation affects enterprise eco-technology innovation indirectly through factors such as FDI, factor structure, industrial structure and R&D investment. Then based on the panel data of China’s 30 provinces from 2005 to 2015, the paper explores the command-controlled, market-motivated and public-involved environmental regulations towards their direct and indirect effects on enterprise eco-technology innovation by Sys-GMM estimation method. Through the analysis of empirical study, the following conclusions are drawn: on the one hand, the direct effects of the three different types of environmental regulations including command-controlled, market-motivated and public-involved environmental regulations on enterprise eco-technology innovation present “U-shaped” curve. 
The reasons are as follows. First, the command-controlled environmental regulation is mandatory, and in this case, enterprises passively accept the “one size fits all” environmental regulation tools. In order to meet environmental standards, it is necessary to purchase pollution treatment equipment or even shut down heavy pollution projects for the enterprises, which will inevitably increase enterprise management and prevention cost in the short term, crowd the enterprise’s eco-technology innovation R&D investment, result in “compliance cost effect”. In the long run, enterprises will transform and upgrade in the ecological industry chain. Then, the negative effect is gradually eliminated and the “innovation compensation effect” will occupy a dominant position. 
Second, market-motivated environmental regulation mainly relies on market price to induce enterprise eco-technology innovation. The implementation effect of environmental regulation is directly related to the perfection of market trading system, trading order and environment. At the initial stage of market-motivated environmental regulation, the market mechanism is imperfect, and the effect of enterprise eco-technology innovation is inevitably greatly reduced. With the continuous improvement of market mechanism, market-motivated environmental regulations such as tradable permits, environmental subsidies, deposit-return systems can increase the income of enterprise eco-technology innovation and stimulate enterprise eco-technology innovation.
Third, public-involved environmental regulations are not a mandatory pressure, mainly through the power of non-governmental organizations to promote enterprise eco-technology innovation. Only when the public participation type environmental regulation reaches a certain level that enterprises will be induced to carry out eco-technology innovation. The FDI, factor structure and R&D investment significantly promote enterprise eco-technology innovation while the industrial structure and education investment do not have expected positive effect on enterprise eco-technology innovation. On the other hand, the indirect effect of environmental regulation on enterprise eco-technology innovation is affected by FDI, factor structure and R&D investment. Among them, environmental regulation has positive effect on enterprise eco-technology innovation through FDI and R&D investment, which is in line with theoretical expectations. But environmental regulation has a negative effect on enterprise eco-technology innovation through factor structure, which is contrary to theoretical expectations. The main reason is that China’s environmental regulation intensity is small in the present situation, the market-motivated and public-involved environmental regulations in the sample are on the left side of the “U-shaped” curve’s inflection point, so it fails to prompt enterprises to achieve the change of factor structure, resulting in distortion of resource allocation, and finally producing offsetting effects on enterprise eco-technology innovation. 
The policy implications of this paper are as follows. First, the government should optimize the environmental regulation portfolio and set the environmental regulation intensity rationally, for example, the government can improve the sewage tax and the resource tax, issue ecological compensation, carry out environmental subsidies, and implement tradable sewage permit and deposit-return system to encourage enterprise eco-technology innovation. Second, the government must learn to use public power to deal with environmental issues, further clarify public environmental participation rights through legislation, establish public green access to environmental governance, and strengthen public opinion supervision on enterprise environmental behavior. Third, the government can establish the long-term mechanism which will drive industrial structure adjustment, promote the rationalization and upgrading of industrial structure, lead the enterprise from relying on resources and cost advantages to relying on technology and brand advantages to reduce resource consumption production models and traditional path dependence, and develop clean and environmentally friendly industries of high value-added, less environmental pollution and sustainable. Finally, the government ought to loosen the factor market, coordinate the proportional relationship between various factor inputs, change the energy-driven economic growth model gradually, and promote cross-regional factors of production such as labor and capital flows relying on breaking administrative barriers and eliminate local protectionism to free "bonus system" in order to improve the efficiency of elements configuration.

Key words:  environmental regulation, eco-technology innovation, dual effect, Sys-GMM