Low-Carbon City Pilot Policy and Corporate Green Innovation: A Quasi-Natural Experiment Based on Chinese A-Share Listed Companies

Whether environmental regulation “forces” or “crowds out” corporate green innovation is both the core proposition of the four-decade Porter hypothesis debate and a practical concern for policy design under China’s “dual-carbon” goals. Taking the low-carbon city pilots established in three waves in 2010, 2012, and 2017 as a quasi-natural experiment, this paper uses panel data of 4957 Chinese A-share listed companies over 2008–2023 and a staggered difference-in-differences (DID) model to systematically examine the effect of the pilot policy on corporate green invention patent applications. The findings are as follows. (1) The low-carbon city pilot significantly promotes corporate green invention patent applications, raising them by about 5.6% on average for firms in pilot cities, which supports the “forcing” mechanism of the weak Porter hypothesis. (2) Financing constraints are the key threshold determining whether firms benefit: the policy effect is significantly positive for firms with lower financing constraints, whereas resource-constrained firms obtain no significant improvement. This study provides direct micro-level evidence for the “conditional validity” of the Porter hypothesis in the Chinese context: the policy produces a “forcing” effect on average, but the distribution of its benefits is moderated by firm resource endowments, and an innovation-offset threshold exists—firms that cross it benefit, while those that do not show no significant effect. The paper provides new evidence from Chinese firms on the relationship between environmental regulation and corporate green innovation and offers implications for differentiated environmental policy design.