Do The Carbon Emissions Trading Help To Converge Marginal Abatement Costs Of CO₂ Between Regions?

The carbon emissions trading pilot spans the eastern,middle and western regions of China,nearly ten years since its launch in 2013,providing a multi-level reference for the construction of a national unified carbon market that officially open in July 2021.The marginal cost of carbon dioxide emission reduction can reflect the cost paid by economic agents or regions for a unit of carbon dioxide emission reduction.Therefore,as an important indicator to measure the effectiveness of resource allocation in carbon emissions trading market,the convergence of marginal abatement cost of CO₂ among regions has received increasing attention from academics and policy makers.Most of the existing literature on the effects of carbon emissions trading pilot policies focuses on environmental effects such as carbon emission reduction and economic effects,and still lacks the perspective of the effects of carbon trading pilot policies on regional resource allocation.In view of this,this paper explores the effectiveness of environmental regulation policies based on the degree of convergence of the marginal abatement cost of carbon between regions.By constructing a variance index of the marginal abatement cost of carbon dioxide,we test whether the carbon trading pilot policy helps to promote the convergence of the marginal abatement cost of CO₂between regions,so as to provide a reliable decision basis for the construction of China’s carbon market and the formulation of market-based environmental regulation policies.This paper firstly takes the panel data of 283 Chinese cities from 2003-2017 as the research sample,selects the directional distance function model more commonly used in the current literature combined with the linear programming method to measure the marginal abatement cost of carbon dioxide,and examines the distribution characteristics of the marginal abatement cost of carbon in different regions,different incomes cities and different resource conditions cities in China.Second,this paper uses the pilot carbon trading policy as a quasi-natural experiment and uses a difference-in-difference model to investigate the impact of the carbon trading pilot policy on the regional differences in marginal abatement cost of CO₂,and conducts a series of robustness tests and heterogeneity analysis.The study finds that:（1）the marginal abatement cost of carbon dioxide in China’s cities has been increasing in recent years,and the marginal abatement cost of carbon dioxide varies greatly among different regions,showing the distribution characteristics of east area>west area>central area.（2）From the perspective of urban distribution characteristics,the marginal abatement cost of carbon is relatively higher in cities with high income levels and non-resource-based cities.（3）The carbon trading pilot policy has a significant negative impact on the index of marginal abatement cost variability of CO₂,in other words,the carbon trading pilot policy can effectively reduce the gap of marginal abatement cost of CO₂ between regions by improving resource allocation efficiency.（4）Based on the analysis of the heterogeneity effect of carbon trading policy,it is found that the effect of carbon trading policy on promoting the convergence of regional marginal abatement cost of CO₂ is stronger for high-income cities,non-resource-based cities and regions with higher market activity.