Economics at your fingertips  

Emissions trading and firm innovation: Evidence from a natural experiment in China

Shenggang Ren, Yucai Hu, Jingjing Zheng and Yangjie Wang

Technological Forecasting and Social Change, 2020, vol. 155, issue C

Abstract: This study investigates the causal impact of market-based environmental regulation on firm innovation by examining a large-scale market-based regulatory attempt in a developing country, namely, China's sulfur dioxide (SO2) emissions trading program. Based on the panel data of China's publicly traded firms from 2004 to 2015, we adopt the difference-in-differences (DID) model to examine the innovation effects of the SO2 emissions trading pilot policy. The results show that the program leads to a significant increase in patents and environmental patents among regulated firms. And the innovation effects of the policy perform better in areas with a high level of environmental enforcement. In further analysis, we find that the program decreases SO2 emissions and promotes industrial growth in pilot areas. These evidences imply that the market-based emissions trading policy indeed promotes firm innovation and environmental innovation even in the context of a developing country, which is conductive to a win-win situation in both environmental protection and economic growth.

Keywords: Emissions trading; Technological innovation; Environmental regulation (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.techfore.2020.119989

Access Statistics for this article

Technological Forecasting and Social Change is currently edited by Fred Phillips

More articles in Technological Forecasting and Social Change from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2021-01-23
Handle: RePEc:eee:tefoso:v:155:y:2020:i:c:s0040162519308996