Abstract
Using data from Chinese listed companies, this study examines how heterogeneous environmental regulations influence green innovation and the moderating role of foreign direct investment (FDI). Our results indicate that both environmental protection taxes and subsidies significantly stimulate corporate green innovation. Crucially, we identify an asymmetric moderating effect: FDI amplifies the impact of environmental protection taxes but weakens the effectiveness of subsidies. The mechanism analysis suggests that FDI may complements the regulatory "stick" of taxes through channels related to credit access and environmental responsibility, while partially substituting for the "carrot" of subsidies through alternative financial resources and technological spillovers. These effects are most pronounced among state-owned enterprises, highly polluting industries, and firms with stronger internal innovation incentives. These findings suggest that a successful green transition may benefit from the strategically integrated management of specific regulatory instruments alongside foreign investment policy.