Firm Performance In Carbon Trading System

Based on the empirical evidence from seven pilot carbon markets in China,this paper utilizes a multi-period difference-in-differences(DID)model to explore the impact of carbon emission trading policy on the performance of regulated enterprises which belong to the emission control list.Conclusions of this paper fall into the following parts:(1)Full sample regression result indicates that the profitability of enterprises included in the emission control list is significantly reduced by the carbon emission trading policy.Using propensity score matching(PSM)method to deal with the full sample,the negative impact increases by nearly 70%,which still supports the original conclusion.Further research shows that the operating costs and revenue of regulated enterprises decrease significantly,where the operating revenue decreases much more.In addition,PSM method improves the underestimation of treatment effect in the original regression.However,R&D expenditure of enterprises is not significantly affected,which means this paper finds no support of "Porter Hypothesis" in the pilot carbon markets.(2)Strict environmental regulation and high average price of carbon allowance reduce the profitability of regulated enterprises.Nevertheless,through further PSM method test,this result is not supported.(3)Finally,this paper studies how the heterogeneity of enterprises influences the regression results.Compared with less polluted firms,the profitability of heavy pollution enterprises decreases more.The conclusion passes the regression test of PSM method.In addition,further study shows that enterprises with high productivity can benefit from the carbon trading policy.One the one hand,this paper enriches the existing literature on the micro mechanism of carbon emission trading policy in China;On the other hand,it can also provide some suggestions for the operation of national carbon market.In addition,special policy design of domestic carbon pilot markets provides a quasi natural experiment,which greatly solves the endogenous problem.Considering the dynamic of enterprises being included in the control list,this paper innovatively constructs a multiperiod difference-in-differences model to discuss the main problem,and makes the results more reliable through a series of robustness tests.