Carbon pricing, green innovation, and production efficiency—new evidence from China
Document Type
Research-Article
Journal Name
Mitigation and Adaptation Strategies for Global Change
Keywords
Carbon emission trading scheme, Green innovation efficiency, Green production efficiency, Network DEA, Spatial difference-in-differences
Abstract
In this study, we try to quantify the carbon ETS effect on green production efficiency, especially considering the green innovation effect. To this end, a network Data Envelopment Analysis (DEA) model is constructed, which embeds the green innovation process into the production process, to calculate the green production efficiency; then a spatial difference-in-differences (SDID) model is employed to evaluate the effect of ETS on urban green production efficiency based on a panel dataset of China’s 275 cities from 2006 to 2019. The results show that the implementation of ETS improves the local overall efficiency of green innovation and production (GIPE) by 15.6%, which is higher than that without considering the innovation process, i.e., 13.3%. In addition, the implementation of ETS decreases GIPE in neighboring cities because of the spillover effect, which is also higher than that without considering the innovation process. Finally, the effects of ETS on urban GIPE are more significant in the regions with high intellectual property protection levels and public environmental awareness. © The Author(s), under exclusive licence to Springer Nature B.V. 2026.