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Regional abatement cost-saving effects of industrial agglomeration

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  • An, Chao
  • Zhou, Peng
  • Ma, Chunbo

Abstract

Previous studies primarily concentrate on the production cost effects of industrial agglomeration; however, its abatement cost-saving effects remain underexplored. To narrow this gap, this study explores the causal linkage between different patterns of industrial agglomeration and the marginal abatement costs of carbon dioxide emissions. To account for spatial spillover effects of industrial agglomeration, this study employs a well-preferred spatial Durbin model, selected based on various data-driven testing procedures. The results show local and spatial spillover cost-saving effects for both specialized and related diversified industrial agglomeration. By contrast, no statistically significant impact has been observed for unrelated diversified industrial agglomeration. The technological effect, synergistic emission abatement effect, and economies of scale effect are three potential channels for the abatement cost-saving effects of industrial agglomeration. This study provides new insights into how industrial spatial layout via agglomeration can be employed to achieve the dual goal of economic prosperity and cost-effective climate mitigation.

Suggested Citation

  • An, Chao & Zhou, Peng & Ma, Chunbo, 2025. "Regional abatement cost-saving effects of industrial agglomeration," Energy Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:eneeco:v:151:y:2025:i:c:s0140988325007303
    DOI: 10.1016/j.eneco.2025.108903
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    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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