Carbon Pricing Induces Innovation: Evidence from China's Regional Carbon Market Pilots

Journal Article (Academic article)

China has launched seven regional pilots of emission trading scheme (ETS) to limit its carbon emissions. Taking advantage of the variations in the regional ETS pilots across regions and sectors and over time, we employ a difference-in-difference-in-differences (DDD) approach to evaluate the effect of ETS on low-carbon innovation at the firm level. Using patent application data of publicly-listed firms in China between 2003 and 2015, we find that the ETS pilots induced innovation in low-carbon technologies. The more active pilots—measured by carbon price and turnover rate of allowance trading—are associated with more intense low-carbon innovation.

Full Text

Duke Authors

Cited Authors

  • Cui, J; Zhang, J; Zheng, Y

Published Date

  • 2018

Published In

Volume / Issue

  • 108 /

Start / End Page

  • 453 - 57

Published By

International Standard Serial Number (ISSN)

  • 2574-0768

Digital Object Identifier (DOI)

  • 10.1257/pandp.20181027


  • en