Does China’s emissions trading system foster corporate green innovation? Evidence from regulating listed companies

ABSTRACTCarbon emissions trading system is expected to be both efficient and flexible in carbon reduction through green innovation. As the world’s largest CO2 emitter, China has launched the emissions trading system (CN-ETS) since 2013 in 7 pilot areas and vowed to build a nation-wide system in the second half of 2017. This study provides preliminary evidence on the impact of the CN-ETS on green innovation and the moderating role of market competition on this relationship at the firm level. Based on data of regulating listed companies in seven pilots, the results show that CN-ETS is significantly positively correlated with green innovation, and market competition weakens the positive relationship, indicating that CN-ETS is effective in the aspect of green innovation, and the effect would be better in less competitive markets.