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Market supervision, innovation offsets and energy efficiency: Evidence from environmental pollution liability insurance in China

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  • Lyu, Chaofeng
  • Xie, Zhe
  • Li, Zhi

Abstract

With the sustained expansion of energy demand, the energy crisis gradually become the core concern of society. Improving energy efficiency (EE) is crucial for saving energy and reducing emissions while ensuring economic growth. Environmental regulation is an effective tool to improve EE and environmental quality. This study introduces market supervision to further explore the impact of environmental regulation on EE. Taking environmental pollution liability insurance (EPLI) implemented in China as a quasi-natural experiment, we construct a time-varying difference-in-differences (DID) model to investigate the impact of EPLI on EE and conduct a series of robustness tests. Results indicate that the implementation of EPLI significantly improves EE, and the results of staggered DID are consistent with our findings. Further, heterogeneity analysis shows that the effect of market supervision will be affected by marketization degree and enterprise characteristics. Mechanism analyses indicate that increasing investment is an effective way for market supervision to realize “innovation offsets”. The evidence of the new relationship between market supervision and EE in this paper will provide a new perspective to formulate policies for policymakers.

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  • Lyu, Chaofeng & Xie, Zhe & Li, Zhi, 2022. "Market supervision, innovation offsets and energy efficiency: Evidence from environmental pollution liability insurance in China," Energy Policy, Elsevier, vol. 171(C).
    • Handle: RePEc:eee:enepol:v:171:y:2022:i:c:s0301421522004864
    DOI: 10.1016/j.enpol.2022.113267
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