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

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<jats:p>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.</jats:p>






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Cui, Jingbo, Junjie Zhang and Yang Zheng (2018). Carbon Pricing Induces Innovation: Evidence from China's Regional Carbon Market Pilots. AEA Papers and Proceedings, 108. pp. 453–57. 10.1257/pandp.20181027 Retrieved from

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Jingbo Cui

Associate Professor of Applied Economics at Duke Kunshan University

Bio: Dr. Jingbo Cui is an Associate Professor of Applied Economics at the Division of Social Sciences and Environmental Research Center at Duke Kunshan University. Before the current position, he was a Chu-Tian Junior Scholar from the Department of Education in Hubei Province, an associate professor at the School of Economics and Management at Wuhan University, a post-doctoral research associate, and visiting scholar at Iowa State University. He holds a Ph.D. in economics from Iowa State University, an M.S. in economics from Wuhan University, and a B.S. in economics and mathematics from Huazhong University of Science and Technology, China. Dr. Cui’s research centers on Environmental Economics, Economics of Innovation, and International Trade. His research has appeared in top academic journals in the fields of Environmental and Resource Economics and Energy Economics, such as Proceedings of the National Academy of Sciences (PNAS), American Economic Review Papers and ProceedingsJournal of Environmental Economics and ManagementAmerican Journal of Agricultural Economics, Environmental and Resource Economics, Journal of Regional Science, China Economic ReviewThe World Economy, Energy Economics, and Energy Policy. He has been serving as the referee for leading journals in Environmental Economics, Agricultural Economics, and Economics of Innovation (i.e., JEEM, AJAE, JAERE, Nature Climate Change, and Research Policy). His research projects have been funded by the National Natural Science Foundation of China (General Program, Junior Program, and Urgent Program), Jiangsu Qinglan Project, and Kunshan Municipal Fund.


Junjie Zhang

Professor in the Environmental Sciences and Policy Division

Junjie Zhang is a professor in the Nicholas School of the Environment at Duke University and Director of the Initiative for Sustainable Investment at Duke Kunshan University. He founded and directed Duke Kunshan's Environmental Research Center and International Master of Environmental Policy Program. Before that, he was an associate professor in the School of Global Policy and Strategy at the University of California, San Diego. He was also a Volkswagen Visiting Chair in Sustainability in Schwarzman College at Tsinghua University. His recent research focuses on empirical issues in energy transition, climate change, and green finance. He has received funding from reputable sources, including the U.S. National Science Foundation, the U.S. National Oceanic and Atmospheric Administration, China National Natural Science Foundation, China’s Ministry of Ecology and Environment, China Council for International Cooperation on Environment and Development, the Energy Foundation, the World Bank, and Asian Development Bank. He holds a B.S. from the Renmin University of China, a B.S. and an M.S. from Tsinghua University, and a Ph.D. from Duke University.

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