IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v195y2023ics0040162523004766.html
   My bibliography  Save this article

Can carbon emissions trading improve corporate total factor productivity?

Author

Listed:
  • Cheng, Zhonghua
  • Meng, Xiangwei

Abstract

This paper first researches the influence of carbon emissions trading (CET) on corporate total factor productivity (TFP) from three aspects of innovation effect, factor allocation effect and cost effect, and then uses the data of listed corporations from 2008 to 2021, and empirically analyzes each effect by multi-temporal difference-in-difference-in-difference (DDD) model. We find that CET can suppress the corporate TFP through direct effect (cost effect), and improve corporate TFP through indirect effects (innovation effect and factor allocation effect). Overall, the indirect effects are more effective. Moreover, the CET can significantly improve corporate TFP, and it is still true after a set of robustness checks. Heterogeneity analysis indicates that CET has a different influence on different types of corporate TFP, and there are also certain differences in their mechanisms.

Suggested Citation

  • Cheng, Zhonghua & Meng, Xiangwei, 2023. "Can carbon emissions trading improve corporate total factor productivity?," Technological Forecasting and Social Change, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:tefoso:v:195:y:2023:i:c:s0040162523004766
    DOI: 10.1016/j.techfore.2023.122791
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162523004766
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2023.122791?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    2. Cai, Xiqian & Lu, Yi & Wu, Mingqin & Yu, Linhui, 2016. "Does environmental regulation drive away inbound foreign direct investment? Evidence from a quasi-natural experiment in China," Journal of Development Economics, Elsevier, vol. 123(C), pages 73-85.
    3. Oestreich, A. Marcel & Tsiakas, Ilias, 2015. "Carbon emissions and stock returns: Evidence from the EU Emissions Trading Scheme," Journal of Banking & Finance, Elsevier, vol. 58(C), pages 294-308.
    4. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    5. Bai, Caiquan & Liu, Hangjuan & Zhang, Rongjie & Feng, Chen, 2023. "Blessing or curse? Market-driven environmental regulation and enterprises' total factor productivity: Evidence from China's carbon market pilots," Energy Economics, Elsevier, vol. 117(C).
    6. Tsuboi, Mizuki, 2019. "Resource scarcity, technological progress, and stochastic growth," Economic Modelling, Elsevier, vol. 81(C), pages 73-88.
    7. Hering, Laura & Poncet, Sandra, 2014. "Environmental policy and exports: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 296-318.
    8. Amil Petrin & Jagadeesh Sivadasan, 2013. "Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 286-301, March.
    9. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    10. Raphael Calel, 2020. "Adopt or Innovate: Understanding Technological Responses to Cap-and-Trade," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 170-201, August.
    11. Xinyue Hao & Fanglin Chen & Zhongfei Chen, 2022. "Does green innovation increase enterprise value?," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1232-1247, March.
    12. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December.
    13. Peter M. Clarkson & Yue Li & Matthew Pinnuck & Gordon D. Richardson, 2015. "The Valuation Relevance of Greenhouse Gas Emissions under the European Union Carbon Emissions Trading Scheme," European Accounting Review, Taylor & Francis Journals, vol. 24(3), pages 551-580, September.
    14. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    15. Gutiérrez, Emilio & Teshima, Kensuke, 2018. "Abatement expenditures, technology choice, and environmental performance: Evidence from firm responses to import competition in Mexico," Journal of Development Economics, Elsevier, vol. 133(C), pages 264-274.
    16. Hu, Jiangfeng & Pan, Xinxin & Huang, Qinghua, 2020. "Quantity or quality? The impacts of environmental regulation on firms’ innovation–Quasi-natural experiment based on China's carbon emissions trading pilot," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    17. Olivier Deschênes & Michael Greenstone & Joseph S. Shapiro, 2017. "Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program," American Economic Review, American Economic Association, vol. 107(10), pages 2958-2989, October.
    18. Chen, Zhongfei & Zhang, Xiao & Chen, Fanglin, 2021. "Do carbon emission trading schemes stimulate green innovation in enterprises? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    19. Peng, Jiaying & Xie, Rui & Ma, Chunbo & Fu, Yang, 2021. "Market-based environmental regulation and total factor productivity: Evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 394-407.
    20. Hao, Yu & Gai, Zhiqiang & Wu, Haitao, 2020. "How do resource misallocation and government corruption affect green total factor energy efficiency? Evidence from China," Energy Policy, Elsevier, vol. 143(C).
    21. Shi, Beibei & Feng, Chen & Qiu, Meng & Ekeland, Anders, 2018. "Innovation suppression and migration effect: The unintentional consequences of environmental regulation," China Economic Review, Elsevier, vol. 49(C), pages 1-23.
    22. Zhang, Yue-Jun & Wang, Wei, 2021. "How does China's carbon emissions trading (CET) policy affect the investment of CET-covered enterprises?," Energy Economics, Elsevier, vol. 98(C).
    23. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lin, Boqiang & Zhang, Aoxiang, 2024. "Impact of government subsidies on total factor productivity of energy storage enterprises under dual-carbon targets," Energy Policy, Elsevier, vol. 187(C).
    2. Gao, Peng & He, Ling & Hu, Shiyang & Xin, Qingquan, 2024. "Double-edged sword: Does strong creditor protection in the bankruptcy process affect firm productivity," International Review of Financial Analysis, Elsevier, vol. 95(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Ming & Zhao, Yingxue, 2023. "Does environmental regulation spur innovation? Quasi-natural experiment in China," World Development, Elsevier, vol. 168(C).
    2. Liu, Donghua & Ren, Shenggang & Li, Wenming, 2022. "SO2 emissions trading and firm exports in China," Energy Economics, Elsevier, vol. 109(C).
    3. Mian Yang & Yining Yuan & Fuxia Yang & Dalia Patino-Echeverri, 2021. "Effects of environmental regulation on firm entry and exit and China’s industrial productivity: a new perspective on the Porter Hypothesis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 915-944, October.
    4. Yanhong Feng & Shuanglian Chen & Pierre Failler, 2020. "Productivity Effect Evaluation on Market-Type Environmental Regulation: A Case Study of SO 2 Emission Trading Pilot in China," IJERPH, MDPI, vol. 17(21), pages 1-27, October.
    5. Peng, Jiaying & Xie, Rui & Ma, Chunbo & Fu, Yang, 2021. "Market-based environmental regulation and total factor productivity: Evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 394-407.
    6. Bai, Caiquan & Liu, Hangjuan & Zhang, Rongjie & Feng, Chen, 2023. "Blessing or curse? Market-driven environmental regulation and enterprises' total factor productivity: Evidence from China's carbon market pilots," Energy Economics, Elsevier, vol. 117(C).
    7. Cui, Xin & Wang, Panpan & Sensoy, Ahmet & Nguyen, Duc Khuong & Pan, Yuying, 2022. "Green Credit Policy and Corporate Productivity: Evidence from a Quasi-natural Experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 177(C).
    8. Liu, Duan & Yu, Nizhou & Wan, Hong, 2022. "Does water rights trading affect corporate investment? The role of resource allocation and risk mitigation channels," Economic Modelling, Elsevier, vol. 117(C).
    9. Guo, Shu & Zhang, ZhongXiang, 2023. "Green credit policy and total factor productivity: Evidence from Chinese listed companies," Energy Economics, Elsevier, vol. 128(C).
    10. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
    11. Wu, Qingyang & Wang, Yanying, 2022. "How does carbon emission price stimulate enterprises' total factor productivity? Insights from China's emission trading scheme pilots," Energy Economics, Elsevier, vol. 109(C).
    12. Chen, Zhongfei & Zhang, Xiao & Chen, Fanglin, 2021. "Do carbon emission trading schemes stimulate green innovation in enterprises? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    13. Gao, Yanyan & Zheng, Jianghuai, 2024. "The opposite innovation impacts of air and water pollution regulations: Evidence from the total emissions control policy in China," Journal of Asian Economics, Elsevier, vol. 92(C).
    14. Hottenrott, Hanna & Rexhäuser, Sascha & Veugelers, Reinhilde, 2016. "Organisational change and the productivity effects of green technology adoption," Resource and Energy Economics, Elsevier, vol. 43(C), pages 172-194.
    15. Geng, Yong & Liu, Wei & Li, Kai & Chen, Hanshu, 2021. "Environmental regulation and corporate tax avoidance: A quasi-natural experiment based on the eleventh Five-Year Plan in China," Energy Economics, Elsevier, vol. 99(C).
    16. Chen, Rushi & Howley, Peter & Kesidou, Effie, 2024. "The impact of ETS on productivity in developing economies: A micro-econometric evaluation with Chinese firm-level data," Energy Economics, Elsevier, vol. 131(C).
    17. Wan, Panbing & Zhang, ZhongXiang & Chen, Lin, 2024. "Environmental co-benefits of climate mitigation: Evidence from clean development mechanism projects in China," China Economic Review, Elsevier, vol. 85(C).
    18. Kong, Gaowen & Wang, Shuai & Wang, Yanan, 2022. "Fostering firm productivity through green finance: Evidence from a quasi-natural experiment in China," Economic Modelling, Elsevier, vol. 115(C).
    19. Ren, Shenggang & Yang, Xuanyu & Hu, Yucai & Chevallier, Julien, 2022. "Emission trading, induced innovation and firm performance," Energy Economics, Elsevier, vol. 112(C).
    20. Xu, Jian & Sheng, Yan, 2023. "Regulations, politics, and firm green innovation," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 13-32.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:195:y:2023:i:c:s0040162523004766. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.