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Urban agglomeration economies and industrial energy efficiency

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  • Han, Feng
  • Xie, Rui
  • Fang, Jiayu

Abstract

This study investigates the mechanism behind the effects of urban agglomeration economies on industrial energy efficiency in theory. On this basis, we match firm level data and panel data of 283 prefecture level and above cities from 2003 to 2010, and we use the dynamic spatial Durbin model to estimate the effects of urban agglomeration economies on industrial energy efficiency. The results reveal that in both the short and long term, the specialization and diversification agglomerations of industries do not have a significant effect on the city itself, but they do significantly reduce the energy efficiencies of the neighboring cities. Therefore, the free rider and “Race to the bottom” effects of industrial agglomeration on industrial energy efficiency exceed the demonstration and synergistic effects. Urban agglomeration has a significant negative spillover effect, and the long-term effect is greater than the short-term effect. Furthermore, we investigate the heterogeneity of the effects based on the industry subdivision. The homogeneity of the industrial structure between cities means that specialization and diversification do not produce the expected promotion effect on industrial energy efficiency in local and surrounding cities in the short and long term, but the degree to which this effect is inhibited differs.

Suggested Citation

  • Han, Feng & Xie, Rui & Fang, Jiayu, 2018. "Urban agglomeration economies and industrial energy efficiency," Energy, Elsevier, vol. 162(C), pages 45-59.
    • Handle: RePEc:eee:energy:v:162:y:2018:i:c:p:45-59
    DOI: 10.1016/j.energy.2018.07.163
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