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Carbon pricing and enterprise productivity-The role of price stabilization mechanism

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  • Mo, Jianlei
  • Tu, Qiang
  • Wang, Jianing

Abstract

Total factor productivity (TFP) is widely used to evaluate the development quality of the economy, and carbon price stabilization mechanism (CPSM) has been introduced to reduce the climate policy uncertainty. Whether and how the CPSM can affect TFP is an issue of great interest. Using a unique panel dataset of China's 494 listed firms in 8 carbon intensive sectors from 2006 to 2019, we examine the effectiveness of the CPSM in China's carbon emission trading scheme (ETS). The results show that the carbon ETS with CPSM which has clear price corridors can improve the TFP by 0.381, the ETS with CPSM which has no explicit price ceiling or floor could improve TFP by 0.198, while the ETS without CPSM has decreased TFP by 0.352. The heterogeneity analysis indicates that the CPSM is effective to improve the TFP in power generation, building materials, nonferrous metals, and chemical sectors. Moreover, in terms of mechanisms, the CPSM can improve the TFP through promoting technological innovation and easing financing constraint. Our findings confirm the effectiveness of CPSM on the improvement of firm-level TFP and provide some key implications on how to design an effective CPSM.

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  • Mo, Jianlei & Tu, Qiang & Wang, Jianing, 2023. "Carbon pricing and enterprise productivity-The role of price stabilization mechanism," Energy Economics, Elsevier, vol. 120(C).
    • Handle: RePEc:eee:eneeco:v:120:y:2023:i:c:s0140988323001299
    DOI: 10.1016/j.eneco.2023.106631
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    2. Li Zhang & Hao Li & Zhumeng Song & Wei Shi & Wenxiang Sheng, 2024. "Measurement of Carbon Total Factor Productivity in the Context of Carbon–Electricity Market Collaboration: An Application of Biennial Luenberger Productivity Index," Energies, MDPI, vol. 17(5), pages 1-19, March.
    3. Guo, Xiaopeng & Zhang, Xinyue & Zhang, Xingping, 2024. "Incentive-oriented power‑carbon emissions trading-tradable green certificate integrated market mechanisms using multi-agent deep reinforcement learning," Applied Energy, Elsevier, vol. 357(C).

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