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Decomposing the impact of digital technology innovation: Technology frontiers, efficiency, and spatial externalities in China's decarbonization

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  • Han, Xibing
  • Zhang, Yue
  • Liu, Chengqing
  • Cheng, Yu

Abstract

As climate change increasingly affects urban areas worldwide, effective decarbonization has become a crucial goal for achieving sustainability targets, especially in fast-growing digital economies like China. While digital technology innovation (DTI) is a key driver, its complex spatial effects on urban decarbonization are not well understood. This study introduces a new analytical framework to examine this issue. Analyzing data from 284 Chinese cities between 2000 and 2023, we use an extended Spatial Durbin Stochastic Frontier (SDSF) model. This approach offers two main contributions: it separates DTI's influence into its effects on the decarbonization technology frontier and on technical inefficiency, and it employs dual spatial matrices to distinguish between synergistic and competitive spillovers. Our findings show a fundamental duality in DTI's spatial externalities. While a city's own DTI improves its performance, spillover effects depend on inter-urban relationships. Geographical proximity encourages positive spillovers and regional collaboration. Conversely, economic similarity creates competitive pressures, resulting in negative spillovers and increased inefficiency in competing cities. Additionally, we identify intelligent manufacturing and financial inclusion as key mediators that enhance DTI's positive regional impacts. These results challenge one-size-fits-all technology policies. Effective strategies should be spatially tailored, promoting cooperative ecosystems among neighboring cities while guiding economically similar ones towards specialized development paths to reduce harmful competition.

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  • Han, Xibing & Zhang, Yue & Liu, Chengqing & Cheng, Yu, 2025. "Decomposing the impact of digital technology innovation: Technology frontiers, efficiency, and spatial externalities in China's decarbonization," Energy Economics, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:eneeco:v:152:y:2025:i:c:s0140988325008667
    DOI: 10.1016/j.eneco.2025.109036
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