Carbon Constraints and Corporate Green Innovation: Evidence from China's National Carbon Market
Main Article Content
Keywords
national carbon market, green innovation, carbon emission intensity, difference-in-differences, financing constraints
Abstract
Against the background of China's continuing pursuit of the dual-carbon goals, whether the national carbon emissions trading market can promote corporate green innovation through a market-based mechanism has become an important question for evaluating the effectiveness of environmental regulation. Using A-share listed companies from 2018 to 2023 as the research sample, this study treats the official launch of the national carbon market in 2021 as a quasi-natural experiment. Because the first compliance cycle mainly covered the power generation sector, firms in industry code D44, namely electricity and heat production and supply, are identified as the treatment group. A difference-in-differences model is then constructed to examine the impact of the national carbon market on corporate green innovation. The results show that, after the launch of the national carbon market, the total number of green patent applications by treated firms increased significantly relative to control firms. Mechanism tests indicate that the policy significantly reduced carbon emission intensity among treated firms, and carbon emission intensity is negatively associated with green innovation, suggesting that carbon constraints are an important channel through which the carbon market affects green innovation. Heterogeneity analyses further show that firms with higher pre-policy attention to green transformation respond more strongly to the policy. In this sample, firms with higher financing constraints exhibit stronger policy responses than firms with lower financing constraints. Dynamic DID estimates show no significant pre-policy differential trend between treated and control firms, while the policy effect gradually emerges after 2021. Placebo tests using the pre-policy period, an alternative post-policy window, an alternative dependent variable, and PSM-DID tests generally support the baseline conclusion. The findings suggest that China's national carbon market not only imposes emission-reduction constraints but may also influence corporate green innovation through carbon-cost pressure and expectations of low-carbon transition.
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