Does China’s carbon market reduce emissions through inducing green behaviours?

Kai Tang () and Hailin Chen ()
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Kai Tang: Guangdong University of Foreign Studies
Hailin Chen: Guangdong University of Foreign Studies

Economia Politica: Journal of Analytical and Institutional Economics, 2025, vol. 42, issue 3, No 2, 649-675

Abstract: Abstract The urgency of combating global climate change and associated emerging environmental issues provokes campaigns to encourage green behaviours that are essential in reducing the negative ecological and environmental impacts. This study aims to analyse the reduction effects of pilot carbon market while considering the underlying nexus between green behaviours and carbon emissions in China. The time-varying difference-in-differences method is used to analyse a newly-complied city-level panel dataset. The empirical results indicate that the pilot carbon market restrained urban carbon emissions by promoting green behaviours, including consumption, production, and innovation. Moreover, the reduction effect of the pilot carbon market tends to vary due to different locations, market environments and government intervention conditions. Evidence is also found that cities in the eastern region, with higher levels of marketization and more robust government intervention, have more substantial carbon-reducing effects from the pilot carbon market. This research formulates effective carbon regulation to benefit developing countries’ environment, society, and sustainability.

Keywords: Carbon market pilots; Urban carbon emissions; Green behaviours; Government intervention; O13; P28; Q56 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40888-025-00375-0

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