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The Impact of Market-Based Environmental Regulation on Carbon Emission Intensity: An Analysis Based on Policy Texts

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  • Jianzu Wu

    (School of Management, Lanzhou University, Lanzhou 730030, China)

  • Zhipiao Yu

    (School of Management, Lanzhou University, Lanzhou 730030, China)

Abstract

Market-based environmental regulations play a crucial role in promoting local carbon emissions reduction under the context of achieving “carbon peaking and carbon neutrality goals” goals. Previous studies have mainly focused on the emission reduction effects of single policy instruments, lacking systematic measurement of market-based environmental regulation. Based on panel data from Chinese prefecture-level cities during 2011–2020, this study constructs a market-based environmental regulation index using a policy text analysis method to empirically examine its impact on carbon emission intensity and the underlying mechanisms. The research findings are as follows: (1) The impact of market-based environmental regulations on carbon emission intensity shows an inverted U-shaped relationship, indicating increased carbon emissions in the short term but favorable carbon reduction in the long term. (2) Mechanism tests reveal that market-based environmental regulations primarily influence carbon emission intensity through enterprise green innovation, showing an inverted U-shaped relationship, suggesting that such regulations may suppress enterprise innovation vitality in the short term but effectively promote green innovation in the long term. (3) The carbon reduction effect of market-based environmental regulations varies significantly across regions with different official characteristics. This study provides an important theoretical basis and policy implications for improving market-based environmental regulation policy design and enhancing carbon reduction effectiveness.

Suggested Citation

  • Jianzu Wu & Zhipiao Yu, 2025. "The Impact of Market-Based Environmental Regulation on Carbon Emission Intensity: An Analysis Based on Policy Texts," Sustainability, MDPI, vol. 17(2), pages 1-30, January.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:2:p:465-:d:1563349
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    References listed on IDEAS

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