The relationship between economic growth and environmental pollution has long been a research priority for many scholars ^[1][2][1,2]. Since reform and opening-up, China has achieved rapid economic development, where China’s manufacturing industry (a pillar industry of economic development) and service industry (the tertiary industry) have expanded rapidly in scale. Manufacturing enterprises consume considerable fossil, petroleum, and other energy sources in the production process, where the combustion of these energies generates numerous air pollutants ^[1][3][4][1,3,4]. Moreover, this massive pollution discharge by enterprises during production also impacts the physical health and daily life of nearby residents ^[5][6][5,6]. Compared with manufacturing, the service industry better satisfies the demands of sustainable economic development. According to the China Ecological Environment Status Bulletin in 2020, 202 (59.9%) of all 337 Chinese cities met the proposed standards on ambient air quality. Days where PM_2.5 was the major pollutant accounted for most of the number of days when air quality did not meet the standards ^[7][8][9][7,8,9]. As a result of intensified air pollution, respiratory tract infections and other associated diseases have also presented an increasing trend among residents. President Xi has proposed that “Lucid waters and lush mountains are invaluable assets.” In this spirit, the effective control and governance of air pollution constitute the basis for guaranteeing sustainable economic development and safeguarding people’s physical health. In this sense, it has become necessary to adjust economic development policies and the overall industrial layout and improve the ecological environment, thus achieving high-quality economic development. Currently, as countries around the world pay more attention to the management of the air environment, they are beginning to see the results of their efforts in the management of air pollution. 

Air pollution has the dual characteristics of spatial agglomeration and diffusion. The number of agglomerated industrial enterprises affects the air quality of both local and adjacent areas. To a certain extent, a regional link exists between air pollution and industrial agglomeration, making it highly necessary to clarify their relationship ^{[10][11][12][13]}[10,11,12,13]. The effect of industrial agglomeration on air pollution is mainly embodied in the following two aspects: (1) Industrial agglomeration aggravates local air pollution: The large-scale agglomeration of enterprises, especially industrial enterprises, generates industrial waste gases and wastewater and increases the emissions of PM_2.5, SO₂, NO_x and other air pollutants in areas of industrial agglomeration. If the local government blindly pursues rapid economic development, the difficulty of regional environmental governance will be further exacerbated, resulting in further environmental deterioration. In addition, the agglomeration of enterprises also attracts the settlement of employees in areas close to plants, and pollution discharge by residents also aggravates local environmental pollution ^[14][15][16][14,15,16]. (2) Industrial agglomeration mitigates local air pollution, mainly by reducing the emissions of air pollutants through economies of scale, technology spillover, production efficiency, and intermediate sharing mechanisms ^[17][18][17,18]. On the one hand, the economies of scale effect induced by industrial agglomeration can lower enterprises’ production costs. Relying on advanced production technologies in agglomeration areas, enterprises can increase production efficiency, transform production modes, and promote energy conservation and emission reduction, thus effectively alleviating emissions of harmful gases. From the perspective of regional innovation, both specialized agglomeration and diversified agglomeration can promote regional innovation, but the former has a more apparent spillover innovation effect ^[19][20][21][19,20,21]. On the other hand, industrial agglomeration can provide the diversified intermediate services required by regional development, so that the economies of scale effect can be achieved in manufacturing through the sharing of intermediate services [22]. In particular, intermediate services provided in a concentrated manner by producer services (represented by finance, law, logistics, etc.) save time and economic costs borne by enterprises when searching for intermediate service providers. Consequently, they can invest more funds and energy in conducting R&D, improving production conditions, and promoting sustainable production.

Scholars have extensively studied the relationships between economic growth, industrial agglomeration, and air pollution ^[23][24][27,28]. Their main points of view are summarized in the following: (1) The “Environmental Kuznets Curve hypothesis” basically states that, as a result of rapid economic development in a country, the environmental quality of the country presents a deteriorating trend first and an improving trend afterward ^{[25][26][27][28][29]}[29,30,31,32,33]. Scholars advocating the “Environmental Kuznets Curve hypothesis” unfold their research mainly from the perspective of carbon dioxide emissions. Carbon dioxide and per capita GDP both present U-shaped, N-shaped, and monotonically increasing relationships, which validate the “Environmental Kuznets Curve hypothesis” ^[8][30][31][8,34,35]. (2) Industrial agglomeration aggravates air pollution. Scholars unfolding their research from this perspective mainly focus on energy consumption and environmental governance costs of the agglomeration of manufacturing using the “Pollution Haven hypothesis”. In the agglomeration process of manufacturing enterprises, the combustion of energy sources by many industrial enterprises increases the emissions of air pollutants, resulting in the deterioration of air quality ^[16][30][16,34]. A large number of enterprises in agglomeration areas further increase the difficulty of environmental pollution governance. Most enterprises have adopted a “free-ride” economies of scale approach and are reluctant to pay the transaction costs incurred by diseconomies of scale. The “Pollution Haven hypothesis” also partially explains the environmental pollution caused by the agglomeration of manufacturing industries ^[32][33][36,37]. That is, countries facing high costs of environmental regulation tend to transfer their manufacturing to countries with low costs of environmental regulation. Consequently, developing countries can increase their manufacturing yield through the absorption of foreign capital, but must still face the increasing emissions of harmful air pollutants [17]. (3) Industrial agglomeration mitigates air pollution. Scholars supporting this perspective argue that industrial agglomeration improves production efficiency, innovation level, production mode transformation, and environmental regulation of enterprises ^[32][33][34][36,37,38]. They further argue that knowledge and technology spillover effects produced by agglomeration can raise the technical level of enterprises, thus driving them to develop environmentally friendly production equipment, transform production modes, and lower air pollution levels ^[35][39]. To encourage economic development and attract enterprises, the government may choose to uniformly purchase pollution discharge facilities in an agglomeration area, thus removing the costs of pollution discharge facilities for individual enterprises. Benefiting from raised regional agglomeration levels and improved production conditions, enterprises can invest more funds in governing pollution discharge, thus mitigating air pollution ^[36][40]. The adoption of new energies and technologies by enterprises can also make their production processes greener and more environmentally friendly, thus contributing to the improvement of local air quality ^[37][41]. To improve residents’ living environment, the government may introduce strict environmental regulation policies. Zhou and Feng (2017) ^[38][42] showed that environmental regulation can significantly inhibit the expansion of heavy industries and reduce the use of fossil energy sources, further showing that there is a significant negative relationship between environmental regulation and the emission of air pollutants.