The impact of environmental regulation on green TFP：A quasi-natural experiment based on China's carbon emissions trading pilot policy

Abstract

The carbon emissions trading pilot policy in China serves as a crucial market-oriented regulation tool to achieve green development. This study explores the impact of this policy on Chinese green TFP (GTFP). We utilize the provincial panel data from 2000 to 2017 and employ the GNDDF-Luenberger model to characterize GTFP. The results show that the carbon emissions trading pilot policy significantly improves GTFP. The effects are more pronounced in regions with more foreign direct investment, smaller technological gaps and higher levels of marketization. The carbon emissions trading pilot policy improves GTFP by promoting practical innovation. Furthermore, the promotion of GTFP through the carbon emissions trading pilot policy primarily relies on the enhancement of technological efficiency, rather than technological improvement. Our study provides policy implications for establishing an effective carbon emissions trading market in China.