Public unacceptability of carbon pricing, perceived costs and effectiveness of policy

Abstract Public acceptability is crucial for the effectiveness of policy implementation. The carbon trading market is widely adopted by many countries and regions to achieve carbon neutrality and mitigate climate change. Our paper utilizes China's carbon trading market as a quasi-natural experiment, drawing on microdata from the China Residential Energy Consumption Survey to analyze the policy's impact on public acceptance of carbon pricing. We find that the carbon trading market significantly reduces the acceptability of carbon prices among households working in carbon-related industries in the pilot areas. This conclusion is still valid after a series of robustness checks. Regarding the mechanism of influence, the carbon trading market raises households' perceived costs, mainly reflected in the negative impact of rising product prices and increasing living costs. Finally, enhancing public perception of carbon, improving the distribution effect and decreasing the information asymmetry of the policy implementation can improve public acceptability of carbon prices.