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A Multidimensional Impact Study of Heterogeneous Market-Based Environmental Regulations on Carbon Emissions

Author

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  • Zizhuo Li

    (School of Economics, Yunnan University, Kunming 650501, China)

  • Yiniu Cui

    (School of Economics, Yunnan University, Kunming 650501, China)

  • Mengyao Guo

    (School of Economics, Yunnan University, Kunming 650501, China)

Abstract

Within the context of global climate change and China’s commitment to the “Dual Carbon” goals (carbon peak and carbon neutrality), this study proposes a novel taxonomy of market-based environmental regulations, dividing them into investment-driven and tax-based supervisory mechanisms. Using panel data from 30 Chinese provinces between 2010 and 2023, we empirically investigate their differential effects on carbon emissions. Results indicate that both regulatory approaches significantly curb carbon emissions, each exhibiting distinct nonlinear patterns: an inverted-U curve for investment-oriented measures and a U-shaped trajectory for tax-oriented policies, implying that excessively stringent tax supervision may lead to a rebound in emissions due to effects such as the “resource curse” and “innovation crowding-out.” Industrial structure transformation functions as a common mediating channel, while green innovation efficiency exerts a distinct moderating influence. Both policy types demonstrate adverse spatial spillover effects, with no support found for the “pollution haven” or “race to the bottom” hypotheses. This study offers new empirical insights into how environmental regulations facilitate green and low-carbon transition through market mechanisms, providing valuable implications for designing ecological policy systems that harmonize emission reduction efficiency with sustainability in China and other emerging economies.

Suggested Citation

  • Zizhuo Li & Yiniu Cui & Mengyao Guo, 2025. "A Multidimensional Impact Study of Heterogeneous Market-Based Environmental Regulations on Carbon Emissions," Sustainability, MDPI, vol. 17(20), pages 1-26, October.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:20:p:9013-:d:1768968
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    References listed on IDEAS

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