Policy regulation, normative cognition, and farm households’ straw-selling decision-making

China’s large-scale agricultural production generates enormous quantities of straw, a significant portion of which remains underutilized, and open burning leads to environmental problems such as increased greenhouse gas emissions. Promoting off-field and high-value straw utilization is a critical strategy for agricultural carbon reduction and sustainable development. Farm households’ decision to sell straw is the pivotal first step in this industrial value chain. However, despite clear social and environmental benefits, farm households’ participation in the straw market remains limited, largely due to the positive externality problem where high private costs of collection and transport are not offset by sufficient private returns. While existing studies have explored single policy instruments, few studies have systematically investigated the combined effects of formal policy regulation and informal normative cognition, or distinguished between the selling decision and the selling intensity. Grounded in institutional embeddedness theory, this study developed an integrated analytical framework to examine farm households’ straw-selling behavior as a two-stage decision process. We utilized the survey data from 715 farm households in Huanggang City, Hubei Province. To address the potential sample selection bias, we employed a Heckman two-stage model to analyze households’ initial selling decision and subsequent selling intensity. The robustness of our findings was further validated via an instrumental variable (IV)-Heckman model to account for potential endogeneity. The empirical results indicated that both policy regulation and normative cognition were significant drivers of farm households’ straw-selling decisions. A key finding was the existence of a significant interaction effect between these two factors at the initial selling decision stage. This synergistic interaction, however, did not extend to the subsequent stage of selling intensity. Furthermore, significant group heterogeneity was observed. The impacts of policy regulation and normative cognition on straw-selling decisions varied markedly among farm households with different locational characteristics and cultivated land areas. This study demonstrates that farm households’ engagement in the straw market is shaped by a dual mechanism of external rules and internal beliefs. Effective policy should move beyond simple regulation to activate farm households’ endogenous motivations by leveraging the guiding function of normative cognition. Policymakers should design interventions that foster synergy between formal and informal norms. The pronounced group heterogeneity invalidates a one-size-fits-all approach, necessitating differentiated strategies. For the farm households far from collection points, improving the density of collection points is a key. For small-scale households, incentive-based policies should be prioritized, and for large-scale households, constraint-based regulations may be more effective. Such targeted policies are essential for maximizing high-value straw utilization and advancing high-quality agricultural development.