Sustainable development effect of regional carbon market—a study based on Shanghai's carbon pilot experience

The carbon market is a new type of environmental control policy that has been widely used in recent years, and it is generall y believed that it can have a positive impact on regional economic development and environmental protection. While the traditional view surrounding environmental regulation is that it will increase the cost of compliance for economic agents, which is not conducive to economic growth and upgrading, the Porter's hypothesis, which emerged in the 1990s, argues that an effective environmental regulation policy has the double dividend of economic development and environmental protection. In order to explain the policy effect of carbon market on regional development, this paper decomposes the sustainable development effect of carbon market with the help of The Creen Solow Model, and at the same time, according to the price-based policy attribute of carbon market, we utilize the fractal market theory in the analytical process to compare and observe the development and change of the effectiveness of the carbon market, so as to make the conclusions more logically self-consistent. The empirical part of this paper utilizes the data of 41 prefecture-level cities in the Yangtze River Delta region during the operation period of the Shanghai carbon market from 2013 to 2020, and measures the sustainable development effect of the Shanghai carbon market through the SCM-DID model. The empirical conclusion supports that the regional carbon market can promote the sustainable development of the region, but the change of this policy effect is highly correlated with the fluctuation of the effectiveness of the carbon market.