Commanddriven vs. market-oriented environmental regulations: impacts on high-quality development of manufacturing industry.

Chunxin Lin1, Keqiang Wang1* and Hongmei Liu

ABSTRACT

The manufacturing industry is a key area of environmental regulation. However,whether command-driven and market-oriented environmental regulations exertheterogeneous impacts on the high-quality development of the manufacturingindustry (HQDM) remains underexplored. This study treats the command-drivenlow-carbon city pilot policy and the market-oriented carbon emissions tradingpilot  policy  as“quasi-natural  experiments”.  Firm-level  data  of listedmanufacturing enterprises spanning 2003–2021, it adopts the double machinelearning method to evaluate the influence of heterogeneous environmentalregulations on the HQDM. Thefindings show that the low-carbon city pilotpolicy significantly inhibits the HQDM, whereas the carbon emissions trading pilotpolicy significantly promotes it. The effect of market-oriented environmentalregulation on the HQDM is primarily achieved through the mechanism oftechnological innovation. In regions where both the low-carbon city pilotpolicy and the carbon emissions trading pilot policy are implemented, bothcommand-driven  and  market-oriented  regulations  boost  the  HQDM,signifying a synergistic effect between them. Further heterogeneity analysisshows that the results for eastern and western areas, state -ownedfirms, andtechnology-intensive manufacturing sectors align with the baseline regressionresults. The conclusions of this study provide important references for theselection of carbon reduction policies, formulating differentiated emissionreduction measures.

Keywords

command-driven environmental regulation, market-oriented environmental regulation,low-carbon city pilot policy, carbon emissions trading pilot policy, high-qualitydevelopment of manufacturing industry, double machine learning