Impacts of digital economy agglomeration on carbon emission: A two-tier stochastic frontier and spatial decomposition analysis of China

Abstract

The digital economy agglomeration (DEAGG), which crucially influences global economic growth, is strongly correlated with carbon emissions performance. This study utilizes prefecture-level city data pertaining to China (sample period; 2006–2019), and it is based primarily on the new economic geography theory. The bilateral effects that DEAGG exerts on carbon emissions were initially investigated using a two-tier stochastic frontier analysis. Subsequently, the spatial econometric technique and the logarithmic mean Divisia index (LMDI) method were combined for a mechanism analysis. The empirical results indicated the following: (1) The agglomeration effect that DEAGG exerted on carbon emissions highly exceeds the spread effect, which leads to a negative net effect. (2) DEAGG reduces carbon emissions mainly by reducing the energy intensity effect and by inhibiting the population scale effect; moreover, the energy structure effect and the economic growth effect that are occasioned by DEAGG yield a hindering impact during the sample period. (3) Further analysis indicates that DEAGG narrows carbon inequality, and that it facilitates the realization of the co-benefits pertaining to air pollution mitigation. Therefore, to enhance DEAGG and environmental quality, we propose specific policy recommendations.