Industrial Enterprises' Green Transformation Path via Emission Trading: Theoretical Model and Empirical Evidence

ABSTRACT Unlocking how the emissions trading system (ETS) propels a true green transformation for industrial enterprises and mastering its complex governance require a central research frontier. By integrating partial equilibrium modeling with empirical analysis, this study robustly shows that the ETS significantly promotes the green transformation of industrial enterprises through incentivizes low‐carbon innovation and alleviates resource misallocation. The further findings reveal: carbon pricing and its volatility on the green transformation have an inverted U‐shaped impact; moderate levels are pivotal for success, while extreme levels prove counterproductive; organizational resilience and managerial green cognition are the key positive moderators that amplify the benefits of the ETS; and the impetus is strongest for technology‐intensive, high‐slack, and heavy‐polluting firms. By innovatively exploring these contingent conditions, this study offers vital insights into optimizing ETS designs and stimulating targeted corporate green initiatives.