<p>This paper explores the unintended consequences of an automated air quality monitoring program aimed at enhancing air quality information disclosure in China. Using a difference-in-differences (DiD) model, we analyze the spatial effects of automated monitoring on the production activities of polluting firms located at different distances from monitoring stations but within the same city. Our findings indicate that automated monitoring has resulted in polluting firms located farther from monitors achieving higher production levels. We provide evidence suggesting that these spatial effects are driven by the strategic responses of local governments, which is to impose stricter regulations on polluting firms closer to monitoring stations. In addition, polluting firms’ input-related measures and land transaction behaviors also exhibit spatial variations that related to their distance from monitors. Our findings enrich the understanding of local strategic behaviors under top-down regulations and offer valuable insights for improving compliance and enforcement efforts in developing countries.</p>