Unintended consequences: market integration and enterprise carbon emissions ——based on the analytical perspective of county-to-district reform

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ABSTRACT The county-to-district reform, as an important measure to break down administrative barriers between cities and counties and promote market integration, raises the question of whether it influences enterprise carbon emissions behaviour. By utilising data from 1992 to 2019 and matching it with patent data for Chinese listed companies, this paper examines the impact of the county-to-district reform on enterprise carbon emissions. The findings show that the reform accelerates market integration, facilitates the free flow of production factors, thus expanding the scale of enterprise production and increasing total carbon dioxide emissions from enterprises. Meanwhile, this process alleviates financing constraints for enterprises and increases the proportion of research and development investment on one hand; on the other hand, the reform intensifies market competition, thereby improving enterprise productivity. Ultimately, this leads to a reduction in overall carbon emission intensity. This phenomenon is particularly evident in non-state-owned enterprises, non-carbon trading pilot regions, northern regions, and small and medium-sized enterprises. This paper explores the impact of changes in China’s government power structure on enterprise carbon emissions behaviour, adding to the research on the role of micro-level enterprises in carbon reduction during the county-to-district reform process.