Does the carbon emission trading scheme enhance enterprises’ green total factor productivity? Evidence from China

With growing global attention to climate change and sustainable development, the green and low-carbon transition has become a key pathway to advancing high-quality economic development. However, whether the carbon emission trading scheme can enhance enterprises’ green total factor productivity while simultaneously achieving emission reductions still requires further investigation. Utilizing relevant data of Chinese A-share listed companies spanning from 2011 to 2023, the present study conceptualizes the carbon emission trading scheme as a quasi-natural experiment and establishes a Difference-in-Differences (DID) model to scrutinize its impact on enterprises’ green total factor productivity (GTFP). The findings reveal that the carbon emission trading scheme notably elevates enterprises’ GTFP, with the outcomes retaining robustness even after addressing endogeneity concerns and conducting rigorous robustness checks. Mechanism tests elucidate that the carbon emission trading scheme primarily propels enterprises’ GTFP by alleviating financing constraints, curtailing agency costs, and promoting digital transformation. Moderating effect tests demonstrate that market competition plays a pivotal role in amplifying the positive influence of the carbon emission trading scheme on enterprises’ GTFP. Heterogeneity analysis suggests that the policy effects of the trading scheme are more noticeable among non-state-owned enterprises, pollution-intensive enterprises, and enterprises situated in the eastern region. Furthermore, an examination of economic consequences unveils that the carbon emission trading scheme not only elevates their GTFP but also fosters their high-quality development. These research outcomes not only diversify the theoretical literature concerning the trading scheme and its economic consequences but also furnish vital theoretical guidance and policy recommendations for refining the carbon emission trading scheme, advancing the construction of the trading market, and bolstering enterprises’ GTFP.