Does low-carbon city pilot affect the enterprise competitiveness in China? Based on a staggered...

Area of Science:

• Environmental Economics
• Industrial Organization
• Policy Analysis

Background:

• China's greenhouse gas emissions are a global concern, prompting the implementation of the low-carbon city pilot (LCCP) policy.
• Existing research on environmental regulations often overlooks their dynamic impact on enterprise competitiveness.
• The LCCP policy's effects on firm-level economic performance require detailed investigation.

Purpose of the Study:

• To evaluate the influence of the LCCP policy on enterprise competitiveness in China.
• To identify the transmission mechanisms through which the LCCP policy affects firms.
• To examine the moderating factors that influence the policy's economic consequences.

Main Methods:

• Utilizing a staggered difference-in-difference model to leverage quasi-experimental variations in LCCP policy adoption.
• Analyzing the dynamic effects of the LCCP policy on average enterprise competitiveness.
• Investigating the impact on specific firm types (capital-intensive, small firms) and key performance indicators (operating costs, R&D expenditure).

Main Results:

• The LCCP policy leads to a significant 3.56% reduction in average enterprise competitiveness.
• Capital-intensive and small enterprises experience more pronounced adverse effects, though these diminish over time.
• Increased operating costs and reduced R&D investment are identified as key transmission channels for the negative impacts.

Conclusions:

• The LCCP policy, while aiming for environmental goals, imposes considerable economic costs on enterprises.
• The adverse economic effects are less severe in regions with higher marketization and intense industry competition.
• Market-based reforms and enhanced competition can potentially mitigate the economic distortions caused by environmental policies.