Smart city and green innovation: Mechanisms and industrial emission reduction effect

Green innovation is essential for environmentally sustainable development. The construction of smart cities offers significant potential for developing green innovation through optimizing urban administration and improving the allocation of critical resources. Using Chinese city data from 2005 to 2019, this study adopts a causal identification framework based on the multi-temporal difference-in-difference method to explore the impact of smart city construction on green innovation and the mechanism and joint industrial emission reduction effect between them. A positive and significant relationship with a weak inverted U-shaped trend was found between smart city construction and green innovation. Besides the direct channel, labor factor allocation, venture capital attractiveness, and market accessibility are essential indirect channels between the two concepts. Furthermore, the effects of smart city construction on green innovation varied depending on the marketization level, administrative rank, population size, and geographic location of the city. In addition, the interaction of the two constructs negatively affected industrial emissions, which helped optimize the environment. These findings suggest that smart city construction offers a digital dividend for developing green innovation and creating an efficient, sustainable environment.