What kind of enterprises will survive and what kind of enterprises will be eliminated is a direct reflection of the market’s selective function. With the gradual increase of environmental regulation and the gradual stringency of emission standards, a large number of polluters’ economic performance and survival state will be inevitably affected. If effective measures are not taken, the market’s selective function will deteriorate the survival state of high polluters and even eliminate them from the market under the pressure of rising clean production costs. 　　A key point in the real economy is whether high polluters will be necessarily eliminated earlier than other enterprises? If not, what is the survival pathway for them? As the Potter hypothesis, it is the result of improving the production efficiency under the pressure of rising clean production costs, or there are other unknown reasons behind it. It is of great significance to give a clear answer to the above questions.　　In order to overcome the impact of pollution externalities, the government will make external pressure on polluters through various forms of environmental regulation. One of the possible ways is to increase their market competitiveness by improving production efficiency. If this logic is established, it will be consistent to the policy objectives of better playing the role of the market’s invisible hand through the government’s visible hand. On the contrary, if the government gives some selective policy support to polluters, such as government subsidies, the improvement of polluters’ survival state is at the cost of distorting the market resource allocation function. Unfortunately, few studies have paid attention to it, and have been able to give a convincing explanation to their survival pathway. 　　This paper investigates the survival state and moderating effect of China’s microcosmic polluters by duration analysis, and tries to spread in the following field: (1) examining the relationship between the pollutant emission intensity and survival state of enterprises in order to judge whether highest-polluters are the first one to be withdrawn from the market; (2) investigating whether polluters can increase their survival probability by efficiency improvement, and evaluating whether their survival is contrary to the law of the market’s selective function; (3) making a classification research according to light-heavy industries.　　This paper obtains the following findings: (1) Contrary to the expectation, higher polluters have a relatively longer survival time, and the endogenous treatment, continuous inspection and other robustness tests can verify the above conclusions. (2) Polluters’ survival pathway more depends on the direct role of government subsidies. Meanwhile, the Potter hypothesis, which fits the market’s selective function, does not appear in the sample period. (3) Capital’s output elasticity plays a role of amplifier to strengthen the subsidy dependence of heavy industry.　　The survival state and survival pathway of polluters is contrary to the function of the market’s selection, which is damage to China’s economic restructuring. Therefore, while increasing the intensity of environmental regulation, the government should cautiously use subsidy policies and force enterprises to achieve green development through efficiency improvement.