An Analysis of the Impact of the Emissions Trading System on the Green Total Factor Productivity Based on the Spatial Difference-in-Differences Approach: The Case of China

Susheng Wang, Gang Chen and Xue Han
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Susheng Wang: School of Economics and Management, Harbin Institute of Technology Shenzhen, Shenzhen 518055, China
Gang Chen: School of Economics and Management, Harbin Institute of Technology Shenzhen, Shenzhen 518055, China
Xue Han: School of Economics and Management, Harbin Institute of Technology Shenzhen, Shenzhen 518055, China

IJERPH, 2021, vol. 18, issue 17, 1-18

Abstract: How to effectively identify the spatial effect of the emissions trading system(ETS) on urban green total factor productivity(GTFP) generated through the linkage of economic factors between cities is a necessary part of scientifically evaluating the effect of ETS policy in emerging- market countries. This study aims to examine the spatial effect, mechanism, and heterogeneity of the ETS on urban GTFP based on the panel data of 281 cities from 2004 to 2017 in China, applying spatial difference-in-differences(DID) Durbin model (SDID-SDM) with multidimensional fixed effect (FE). The results show that ETS significantly improves the GTFP of the pilot cities, produces a spatial spillover effect and the results are robust to the placebo test, propensity score matching SDID (PSM-SDID) test, and Carbon-ETS interference test. Further analysis shows that the policy effect is mainly driven by improving energy efficiency, promoting green innovation, and optimizing the industrial structure. In addition, we found that ETS performs better in regions with a high degree of marketization, strong environmental law enforcement, and a low proportion of coal consumption. In general, the identification method of this study can be used as a scientific reference for conducting similar research in other emerging countries.

Keywords: emissions trading system; green total factor productivity; spatial difference-in-difference; energy efficiency; green innovation; industry structure; spatial heterogeneity (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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