Market Incentives Research Articles

Induced green innovation of suppliers: The “green power” from major customers

In the context of green development, the major challenge is to incentivize companies as key players to participate in green innovation. This paper focuses on the market incentive mechanism for green innovation to investigate whether major customers with green development concepts can enhance the green innovation of upstream suppliers, which means the “green power” from major customers. The research is based on paired data of Chinese A-share listed companies and their major clients from 2009 to 2018. The findings show that: (1) Major customers with green development concepts can enhance the green innovation of upstream suppliers, and this conclusion remains robust after a series of tests. (2) The study also identifies the influence mechanisms, which include: (a increasing the purchase amount to green suppliers, and (b providing green innovation-related resource support to upstream suppliers. (3) Heterogeneity analysis shows that major customers with green development concepts can significantly drive the green innovation of private and smaller suppliers to a greater extent. (4) The induced green innovation of suppliers from major accounts is more significant in samples with high customer concentration. This research identifies the “green power” from major customers as an important market mechanism for incentivizing green innovation. The conclusions of this paper will lead to some policy implications for the promotion of green innovation and the construction of green supply chains.

The role of electricity market design for energy storage in cost-efficient decarbonization

The role of electricity market design for energy storage in cost-efficient decarbonization

Governing-by-aspiration? Assessing the nature and implications of including negative emission technologies (NETs) in country long-term climate strategies

In order to address the pressing challenge of climate change, countries are now submitting long-term climate strategies to the United Nations Framework Convention on Climate Change (UNFCCC) process. These strategies include within them potential future use of ‘negative emissions technologies’ (NETs). NETs are interventions that remove carbon from the atmosphere, ranging from large-scale terrestrial carbon sequestration in forests, wetlands and soils, to use of carbon capture and storage technologies. We assess here how NETs are discussed in 29 long-term climate strategies, in order to ascertain the risk that including the promise of future NETs may delay the taking of short-term mitigation actions. Our analysis shows that almost all countries plan to rely on NETs, particularly enhanced use of natural carbon sinks, even as a wide array of challenges and trade-offs in doing so are highlighted. Many strategies call for improved accounting systems and market incentives in realizing future NETs. While no strategy explicitly suggests that NETs can be a substitute for short-term mitigation, most estimate substantial potential for future use of NETs even in the face of acknowledged uncertainties. This, we suggest, may have the consequence of resulting in what we describe here as ‘a spiral of delay’ characterized by the promise of future NET options juxtaposed with the simultaneous uncertainty around these future options. Our analysis highlights that this inter-connected delaying dynamic may be intrinsic to what we term ‘governing-by-aspiration’ within global climate politics, wherein the voicing of lofty future ambition risks replacing current action and accountability.

The Impact of Carbon Emission Trading Policy on Enterprise ESG Performance: Evidence from China

The carbon emission trading system profoundly impacts enterprises’ sustainable development as an important market incentive environmental regulation tool. Through data collected from Chinese A-share listed enterprises in Shanghai and Shenzhen from 2011 to 2019 and Bloomberg ESG score data, this paper empirically analyses the impact of carbon emission trading policy on enterprise ESG performance and its channel mechanism using the difference-in-difference (DID) method. Results of this study indicate that carbon emission trading policy improves enterprise ESG performance significantly, and robustness tests confirm these findings. Carbon emission trading policy can encourage enterprises to enhance their R&D investments and promote internal controls, ultimately enhancing their ESG performance. Additionally, carbon emission trading policy positively impacts ESG performance in low-carbon enterprises, enterprises where the CEO is separated from the company, enterprises with a high degree of digital transformation, and enterprises receiving high government subsidies. This paper extends our research into the economic implications of carbon emission trading policy, enriching the literature on market-based environmental regulation policies’ impact on enterprise ESG performance. With respect to governments’ use of carbon emission trading to regulate enterprises environmentally, this paper provides theoretical guidance. It has significant practical implications for improving enterprise ESG performance and sustainability.

The effect of carbon emission policy on financial performance of target companies in China

Carbon emission policy aims to restrict carbon emissions from energy-intensive companies. It encourages target companies to take green innovation but brings fulfillment pressure. Policy prospects for a low-carbon economy are widely discussed in current studies while insufficient attention has been paid to the effect of the policy on the operating activities of target companies. Using the data of Chinese A-share listed companies from 2007 to 2020, this paper explores the effect of carbon emission policy on the financial performance of target companies. The main empirical results prove the significant positive effect of the policy on the financial performance of target companies and reject the interference of earnings management and survivor bias. Further analysis indicates that target companies significantly reduce the selling, general and administrative (SG&A) expenses and non-operating expenses. The trade of carbon quotas between target companies is allowed and it is regarded as non-operating activity. Results of non-operating revenues and expenses prove that target companies tend to actively reduce carbon emissions but the action does not exceed the policy expectation. The increasing efficiency of asset utilization represents that target companies have taken relevant measures to deal with overcapacity. This paper confirms the positive policy responses of target companies. Policy implications are proposed from the perspective of coverage expansion and market incentive mechanisms to realize the full potential of target companies for carbon emission reduction.

Salvage decision-making based on carbon following an eastern spruce budworm outbreak

Forest disturbances, such as an eastern spruce budworm (Choristoneura fumiferana) outbreak, impact the strength and persistence of forest carbon sinks. Salvage harvests are a typical management response to widespread tree mortality, but the decision to salvage mortality has large implications for the fate of carbon stocks (including forest carbon and harvested wood products) in the near and long terms. In this study, we created decision-support models for salvage harvesting based on carbon after an eastern spruce budworm outbreak. We used lasso regression to determine which stand characteristics (e.g., basal area) are the best predictors of carbon 40 years after an outbreak in both salvage and no salvage scenarios. We modeled carbon at year 40 for different treatment scenarios and discount rates. Treatment scenarios represent residual stand conditions that may be present when an outbreak occurs. Economic discount rates were applied to 40-year carbon values to account for near and long-term carbon storage aspects. We found that the volume and size of eastern spruce budworm host species are significant predictors of salvage preference based on carbon. We found overall that salvaging less volume is recommended to avoid major swings in carbon budgets and that discounting carbon values to apply weight to near or long-term sequestration greatly affects whether salvaging is preferred. Lasso models are constructed for the northeastern US, however, similar concepts may be applied beyond our study area and potentially for other insect outbreaks similar to spruce budworm, such as mountain pine beetle (Dendroctonus ponderosae) or hemlock woolly adelgid (Adelges tsugae). From a policy standpoint widespread salvaging could create a large carbon emissions deficit with the risk of not being fully replenished within a desired timeframe. Since salvaging is often financially driven, especially for private landowners, carbon market payments or incentives for not salvaging is a consideration for future policy.

Incentives and barriers to private finance for forest and landscape restoration

Increased private finance can accelerate forest and landscape restoration globally. Here we conduct semi-structured interviews with asset managers, corporations and restoration finance experts to examine incentives and barriers to private restoration finance. Next, we assess what type of restoration projects and regions appeal to different private funders and how current financial barriers can be overcome. We show that market incentives for corporations include meeting net-emission-reduction commitments, impact and sustainable branding opportunities, and promotion of sustainability in supply chains. Conversely, asset managers face stronger barriers to investing in restoration as it is deemed a high-risk, unknown investment with low profitability. We find that investment finance biases towards restoration projects in low-risk areas and corporate finance towards areas with business presence. Both private finance types tend to omit projects focusing on natural regeneration. Through expanded and diversified markets for restoration benefits, strong public policy support and new financial instruments, private finance for restoration can be scaled for a wider variety of restoration projects in more diverse geographical contexts.

Efficiency of managing regional economic development in wartime (Ukrainian experience)

Each state has its own regional peculiarities, just as each state should take all possible measures to ensure the uniform and efficient economic development of each of its regions, in accordance with the existing potential and the infrastructure already in place. In order to develop measures for effective management of the economic development of regions, it is necessary to conduct a retrospective analysis of statistical data, which will allow to identify the peculiarities of their current financial condition and group them by the degree of development. Accordingly, the purpose of the study is to determine the optimal approaches to ensuring the effectiveness of regional economic development management, taking into account the martial law in Ukraine. The performance of regional enterprises, investment volumes and output are largely determined by market mechanisms and incentives that support concentration processes and lead to the growth of spatial disparities within Ukraine. The uneven development of regions, especially under martial law, may exacerbate social and demographic problems, which will complicate economic recovery after the end of hostilities. The study identified the main directions of regional development, according to their belonging to a particular cluster, and formulated recommendations aimed at improving the economic efficiency of the regions.

Synergies of green policies and their pollution reduction effects: Quantitative analysis of China's green policy texts

Synergy is an important step to enhance policy effectiveness and has been discussed in many fields. In order to promote the transformation and upgrading of polluting industries, green policy synergy is urgent to be studied comprehensively. Thus, this paper analyzes the temporal evolution laws of policy content synergy, policy department synergy, and policy type synergy, and further investigates the pollution reduction effect of policy synergy according to the green policy texts issued by Chinese ministries and commissions from 2001 to 2021. The results are as follows. (1) Policy content synergy significantly suppresses the emission intensity of various pollutants. The pollution reduction effect is proportional to the content synergy degree of policies. (2) The policy department synergy significantly reduces the emission intensity of sulfur dioxide, solid waste, and comprehensive pollution, but the suppression effect on chemical oxygen demand and ammonia nitrogen oxygen demand is not obvious. (3) The pollution reduction effect varies with the policy type synergy. Specifically, the synergistic pollution reduction effect of command and control, market incentive, and public participation policies is the best, followed by market incentive and public participation policies, and that of command and control and market incentive policies is the worst. (4) Further research shows that energy consumption significantly negatively regulates the pollution reduction of the policy content synergy and the policy type synergy, but not the policy department synergy. Meanwhile, adjusting industrial structure can promote pollution reduction. This study provides an important reference for enhancing the synergy among green policies and achieving the goal of carbon peak and carbon neutrality.

Household constraints and dysfunctional rural–urban migration

This paper aims to explain why over the past two decades in Chile internal rural–urban migration has not worked as an effective equalizing mechanism for territorial income disparities. In view of this aim, we investigate how labor market incentives and non-market barriers structurally affect migration. Based on national household surveys, our empirical strategy controls for the self-selection of working migrants, allowing the estimation of a non-endogenous earnings differential while relying on a consistent poverty identification at the origin. On the one hand, our results show that earning differentials observed by potential working migrants encourage migration. However, on the other hand, the household-level constraints of the potential working migrant, such as stayers’ welfare, might work as a pull or push factor. Thus, we are in the presence of a market failure in which migrants are not strictly those who could profit most from labor market differentials but rather those who are not constrained by poverty and the low human capital of their families. Consequently, this market failure explains the ineffectiveness of migrations as an welfare-equalizing mechanism, shedding light on the type of public policies needed to achieve more functional migration flows.

True insights or ticking boxes? Rapid assessment of rights‐based management in artisanal fisheries

AbstractRights‐based fisheries management (RBFM) seeks to create market incentives to reduce competition, avoid overexploitation, and increase economic efficiency. Particularly for artisanal fisheries, however, assumptions of RBFM may not be met and its use needs to be carefully considered. This study applies an existing tool (SEASALT) to evaluate the strength of RBFM based on attributes of security, exclusivity, fish mortality, scale, responsibility, limitations, and transferability. Results for 17 fisheries in Mexico show a positive (nonsignificant) relationship between the strength of RBFM and stock status, and no effect on prices or landed value. Real‐world fisheries governance systems are much more complex than the simple linkages between attributes implied in SEASALT, but results highlight pre‐existing monitoring and enforcement capacity as essential for successful RBFM. Transitions to RBFM may strengthen this capacity, but likely cannot create it where it does not already exist. Based on our findings, RBFM strategies may benefit from group quotas with limited transferability to avoid negative social outcomes from consolidation or rent capture by intermediaries; this could potentially build on the latent capacity of traditional community associations common in many artisanal fisheries.

Quality Improvement Efforts in VA Community Living Centers Following Public Reporting of Performance

ABSTRACT For two decades, the U.S. government has publicly reported performance measures for most nursing homes, spurring some improvements in quality. Public reporting is new, however, to Department of Veterans Affairs nursing homes (Community Living Centers [CLCs]). As part of a large, public integrated healthcare system, CLCs operate with unique financial and market incentives. Thus, their responses to public reporting may differ from private sector nursing homes. In three CLCs with varied public ratings, we used an exploratory, qualitative case study approach involving semi-structured interviews to compare how CLC leaders (n = 12) perceived public reporting and its influence on quality improvement. Across CLCs, respondents said public reporting was helpful for transparency and to provide an “outside perspective” on CLC performance. Respondents described employing similar strategies to improve their public ratings: using data, engaging staff, and clearly defining staff roles vis-à-vis quality improvement, although more effort was required to implement change in lower performing CLCs. Our findings augment those from prior studies and offer new insights into the potential for public reporting to spur quality improvement in public nursing homes and those that are part of integrated healthcare systems.

Does environmental regulation inhibit enterprise performance? Evidence from listed energy firms in China

This paper investigates the relationship between Command and Control Regulation (CER), Market Incentive Environmental Regulation (MER), Technological Innovation (TIL) and energy enterprise performance, focusing on the case of China. It argues that: 1) the impact of various environmental regulations on energy firms is not uniform, with CER having a significant negative effect while Market Incentive Environmental Regulation (MER) has no notable direct impact; 2) the level of TIL at energy firms contributes to regulating the effect of CER and MER on their performance; and (3) TIL has a double threshold effect in the impact of MER on energy firm performance, with a significantly negative impact in the first interval, no significant impact in the second interval, and a significantly positive impact in the third interval. In conclusion, considering the diverse TIL of energy firms, optimizing the design of environmental regulations is crucial in promoting energy transformation strategy.

Social solidarity, social infrastructure, and community food access.

This study examines the case of community resource mobilization within the context of a farmers market incentive program in Washington D.C., USA to illustrate the ways in which providing opportunities for people impacted by food inequities to develop and lead programming can help to promote food access. Through an analysis of interviews with 36 participants in the Produce Plus program, some of whom also served as paid staff and volunteers with the program, this study examines the ways that group-level social interactions among program participants helped to ensure the program was accessible and accountable to the primarily Black communities that it serves. Specifically, we explore a particular set of social interactions, which we collectively term social solidarity, as a community-level form of social infrastructure that program volunteers and participants mobilized to support access to fresh, local food in their communities. We also examine the elements of the Produce Plus program that contributed to the flow of social solidarity within the program, providing insight into the ways in which the structure of food access programs can serve as a social conduit to facilitate or hinder the mobilization of community cultural resources like social solidarity.

Comment on “The Evolution of University–Industry Linkages in Thailand”

Thailand has set itself the target of becoming a developed country by 2037. To achieve this goal, the nation must enhance its technological capabilities to produce higher-value-added products. Over the past two decades, Thailand has worked to improve its competitiveness through innovation by increasing research and development (R&D) investment. The country's gross domestic expenditure on R&D (GERD) rose from 0.25% of the gross domestic product (GDP) in 2000 to 1.33% in 2020. This is driven by a significant increase in private sector R&D expenditure, which rose from 35% of total GERD in 2000 to 68% in 2020. However, firms' R&D output performance, as measured by granted patents, has seen slower progress (Rattanakhamfu & Itthiphatwong, 2019). Some have argued that this is due to weak university-industry linkages (UILs). In fact, 15 years ago, Brimble and Doner (2007) emphasized the role of university–industry linkages (UILs) in Thailand's technological competencies. Based on their analysis of four sectors—the automotive sector, the textile and garment sector, the agro-industry, and the electronics sector—Brimble and Doner concluded that Thai UILs played a very limited role in the country's economic development. They attributed weak UILs to low competition in the domestic market, inefficient structures and weak incentives in Thai universities, and the fragmentation of the Thai bureaucracy. Intarakumnerd and Jutarosaga (2023) contribute to the existing literature by examining the role of UILs in three sectors, namely the automotive sector, the electronics sector, and the pharmaceutical sector, based on their analysis of R&D and Innovation (RDI) Surveys between 2014 and 2018 and case studies. They find that despite significant development in the higher education system over the past two decades, Thailand's UILs remain weak. Most UIL activities focus on human resource development, particularly student internships and employee training. Research-related linkages are particularly weak. Among the sectors studied, the pharmaceutical and electronics industries appear to have stronger ties with universities than the automotive sector. In summary, Intarakumnerd and Jutarosaga offer valuable insights into the evolution of UILs in Thailand. To further enhance their contribution to the field, Intarakumnerd and Jutarosaga should consider the following revisions: First, by providing descriptive statistics on the firms in the sample so that readers can understand the firms' characteristics from the RDI survey, such as firm size and nationality. Although Intarakumnerd and Jutarosaga argue that there is a bias towards large firms, as all have asset sizes of more than THB 10 million, this is not the case when firm size is measured by sales. In fact, the proportion of small, medium, and large firms are relatively equal (each around 30%–39%) in all survey years. Second, by offering recommendations to improve not only student internships but also other underdeveloped UIL forms in Thailand, such as research partnerships, technology transfers, and industry-sponsored research.

Carrot and stick: Does dual-credit policy promote green innovation in auto firms?

The dual-credit policy is expected to achieve subsidy policy withdrawal through the effective market-oriented mechanism of credit trading, which has both rewards and sanctions for auto firms. The policy can activate the endogenous motivation of automakers to conserve energy and cut carbon emissions, which aids in creating a long-term mechanism to foster the growth of the auto industry. This paper examines the impact of the dual-credit policy on the quantity and quality of green innovation in auto firms using the difference-in-differences (DID) model. Based on the data of listed firms in the auto industry in the China A-share market from 2014 to 2020, we discover that the DCP-assessed auto firms’ green innovation performance improves significantly after implementing the DCP. By analyzing the mediating effect, we identify that the dual-credit policy enhances corporate environmental responsibility and R&D investment, thus improves their green innovation performance. Further, the role of the dual-credit policy in enhancing green innovation increases significantly with the weakening of government environmental subsidies and the strengthening of government environmental penalties. Our findings expand the research on the implementation effects of the dual-credit policy and policies combining environmental regulation and market incentives. We emphasize the importance of the dual-credit policy in furthering the reform of the energy consumption structure and building a green innovation system that is focused on the market, and we propose that the government play a complementary role with the market through reasonable regulation and supervision.

Development of the regions of Ukraine in the conditions of today's challenges

The article's authors attempted to construct an optimistic scenario for the socio-economic development of the Kharkiv oblast. They analyzed pre-war indicators of the region's economic, social, and environmental conditions, considering the state's involvement in the post-war reconstruction of the region. The scenario construction was based on an econometric model, which confirmed the relationship between investments and the gross regional product and the placement coefficient, revealing Kharkiv Oblast's comparative advantages in the service sectors, particularly in IT and industry. Through their calculations, the authors concluded that investments played a crucial role in capital accumulation and increased productivity during the post-war reconstruction process in the region. The authors calculated the placement coefficient indicators specifically for the Kharkiv region. The results confirmed that the region has the prerequisites for post-industrial development during the post-war reconstruction. However, the situation is complicated by the need to finance the region's devastated infrastructure. The researchers emphasized the importance of attracting investments in sectors that directly contribute to human capital formation, such as education, scientific activities, and healthcare. The authors also highlighted the potential risks and threats associated with post-industrial development in the Kharkiv oblast. On a model level, the authors outlined various options for regional state policies aimed at the recovery and development of regional economies. Both considered options prioritize the formation of market incentives for regional development. The scientists acknowledged that in conditions of uncertainty, future development scenarios for regions in Ukraine, including the Kharkiv region, possess an alternative and probabilistic nature. Furthermore, the researchers identified areas for further scientific research, emphasizing the importance of an interdisciplinary approach that combines economics, political science, regional studies, and ecology. Keywords: regions, socio-economic development, gross regional product, placement coefficient, post-war reconstruction.

Anti-corruption and corporate pollution mitigation: Evidence from China

Corruption is considered to be a major cause of increased pollution. However, little research has focused on the micro-environmental consequences of political initiatives aimed at curbing corruption, such as anti-corruption campaigns. Based on data from Chinese industrial enterprises, we investigate the impact of anti-corruption on corporate pollution mitigation. Our findings show that China's powerful anti-corruption campaign launched in 2013 has considerably reduced the pollution emission intensity of firms colluding with the government. The mechanism analysis suggests that the anti-corruption campaign has driven firms to mitigate pollution via the hardening effect of environmental regulation, the promotion effect of the market incentive function, and the optimization effect of corporate resource allocation. These findings provide important theoretical and practical value for environmental governance practices in nations like China.

The Contradictions in Putin’s Economic Nationalism: From Western Partner to Fortress Russia

Abstract This article charts the trajectory of Putin’s economic policy. All countries face the challenge of preserving national interests and identity while reaping the benefits of global economic integration. These pressures are particularly acute in the case of Russia, given its historical legacy as a global superpower. From the outset, Putin’s pragmatic embrace of global integration and market incentives was in tension with his authoritarian centralization of power at home and hostility towards the West abroad. Up until 2008, Putin was able to keep these two conflicting worldviews, and rival policy teams, in balance. But after 2012, geopolitical confrontation won out over economic development, culminating in the reckless invasion of Ukraine in February 2022.

Is the carbon emissions trading system conducive to the urban green technology innovation level? Evidence from China

Although the academic community has come to accept the Carbon Emissions Trading Scheme (CETS) as a viable market incentive for environmental control, more research is needed to determine if the creation of such a scheme can spur the development of green technologies. Based on the panel data of 274 Chinese cities from 2010 to 2017, this paper uses the propensity score matching-difference in difference (PSM-DID) method to empirically test the green innovation effect of the pilot areas relative to the non-pilot areas before and after the implementation of the policy, uses the mediating effect model and the moderating effect model to test its internal influence mechanism, and further examines the heterogeneity of the policy effects. The findings indicate that pilot CETS deployment can significantly improve green technology innovation (GTI), and the conclusion is still valid after a series of robustness tests. Moreover, the human capital input and the science and technology support have a significant partial mediating effect in the policy effect of CETS on GTI, with the latter contributing greatly. The overall marketization and the financial development positively moderate the impact of CETS on GTI, but government involvement have a reverse moderating effect. In addition, the policy effects is better in cities with higher administrative levels in China and in cities in eastern and western China, while the policy effects in cities with lower administrative levels and in central China is weak or not significant. This study has far-reaching theoretical value and momentous practical significance for China and other developing countries in terms of further deepening and improving the CETS, enhancing GTI, and promoting urban sustainable development.