Peer effect on low-carbon practices of firms along the value chain: Evidence from China

Abstract

A significant number of papers have found that the behavior and actions of firms are directly related to their peers and surrounding conditions. However, the spillover effects in low-carbon practices, especially the mimicry of firms on low-carbon practices from their peers in upstream and downstream industries along the value chain are barely discussed in the literature. In this paper, we extend the research on peer effect to the convergence of peers in the upstream and downstream industries, explore the spillover effects and mechanism of low-carbon practices among firms along the entire value chain, and further explore whether the degree of environmental regulation influences the peer effect.Our results suggest that there is a significant peer effect on low-carbon practices along the entire value chain. The intensities of carbon emissions of the focal firms are not only influenced by the low-carbon practices of their peers in the same industry, but also influenced by the low-carbon practices of their peers in the upstream and downstream industries. The results are robust when substituting the indicators of low-carbon practices, the scope of peers, and linkages of the value chain. The heterogeneity analysis by different city groups, firm types, and industry groups is also conducted. The results provide important implications for the policymakers to better understand and promote the low-carbon practices at the firm level.