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Emissions Trading Schemes and Directed Technological Change: Evidence from China

Author

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  • Tian, Ruijie

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

This paper examines the impact of carbon emissions trading schemes (ETS) on technical change proxied by the number of green patents in the context of the pilot ETS in China. I find a small increase of 0.16 patents per firm and year. A 10 percent increase in carbon prices increases green patents by 2 percent. The strongest effects are for the two regions in the upper range of carbon prices and for more productive firms. However, there are contrasting patterns at the extensive and intensive margins of green innovation: the pilot ETS reduces entry into green innovative activities but increases levels of innovating for firms that were innovative before they were regulated by ETS, especially for the more productive firms. This indicates that an important policy challenge is to encourage the firms covered by ETS to start innovation in green technologies; this applies particularly to the larger and more productive firms.

Suggested Citation

  • Tian, Ruijie, 2020. "Emissions Trading Schemes and Directed Technological Change: Evidence from China," Working Papers in Economics 797, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0797
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    File URL: https://gupea.ub.gu.se/handle/2077/66913
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    More about this item

    Keywords

    Carbon Pricing; Directed Technological Change; Innovation; Heterogeneous Firms.;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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