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Can the low-carbon city pilot policy promote firms’ low-carbon innovation: Evidence from China

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  • Ge Yang

Abstract

The low-carbon city pilot policy is an environmental regulation aimed at reducing carbon emissions at the municipal level. Previous research mostly focused on evaluating its environmental performance and discovered it could enhance pilot cities’ low-carbon innovation. However, the effects of the low-carbon city pilot policy on firm-level low-carbon innovation and their economic impact have yet to be investigated. This research uses a sample of Chinese A-share listed firms and the difference-in-difference method to examine the effect of the low-carbon city pilot policy on firms’ low-carbon innovation. The baseline regression showed that the low-carbon city pilot policy could greatly encourage low-carbon innovation among firms in pilot cities. The mechanism analysis demonstrated that this improvement effect is attained by easing these firms’ financing constraints. According to the heterogeneity analysis, we discovered that state-owned firms and firms situated in pilot zones with municipal secretaries who have larger promotion incentives are more susceptible to this policy. Additionally, the research on this policy’s economic impact revealed that, following its adoption, the market value and comparative advantages of the firms in the pilot areas also increased. The findings of this study have implications for the enhancement and national expansion of low-carbon policies adopted at the city level.

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  • Ge Yang, 2023. "Can the low-carbon city pilot policy promote firms’ low-carbon innovation: Evidence from China," PLOS ONE, Public Library of Science, vol. 18(1), pages 1-13, January.
    • Handle: RePEc:plo:pone00:0277879
    DOI: 10.1371/journal.pone.0277879
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    References listed on IDEAS

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    1. Huo, Weidong & Qi, Jie & Yang, Tong & Liu, Jialu & Liu, Miaomiao & Zhou, Ziqi, 2022. "Effects of China's pilot low-carbon city policy on carbon emission reduction: A quasi-natural experiment based on satellite data," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    2. Barasa, Laura & Knoben, Joris & Vermeulen, Patrick & Kimuyu, Peter & Kinyanjui, Bethuel, 2017. "Institutions, resources and innovation in East Africa: A firm level approach," Research Policy, Elsevier, vol. 46(1), pages 280-291.
    3. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
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