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Economic Implications of Digital Transformation on Pollution Reduction: A BART Analysis of Firm-Level Data

Author

Listed:
  • Xu, Xiaohui

    (Zhejiang Sci-tech University, People's Republic of China)

  • Chen, Xiaoshi

    (Zhejiang Sci-tech University, People's Republic of China)

Abstract

Prior research has primarily examined the average economic effects of digital transformation, with limited attention to its heterogeneous treatment effects. This study applies the Bayesian Additive Regression Tree (BART) approach to analyze how digital transformation influences firms’ pollution emissions and its broader economic implications. Using a dataset of 32,340 firm-year observations from Chinese A-share listed companies (2007–2022), we find that the impact of digital transformation on pollution emissions varies significantly across firms. The key economic mechanisms driving this effect include increased green innovation, more efficient factor allocation, and enhanced firm positioning within social networks. These findings offer new insights into the role of digital transformation in corporate environmental strategies, firm productivity, and economic sustainability, highlighting its differential effects across firms.

Suggested Citation

  • Xu, Xiaohui & Chen, Xiaoshi, 2025. "Economic Implications of Digital Transformation on Pollution Reduction: A BART Analysis of Firm-Level Data," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 32(1), pages 125-152, January-J.
    • Handle: RePEc:ris:apecjn:0113
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    More about this item

    Keywords

    digital transformation; enterprise emissions; green innovation; BART;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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