We examine the impacts of China’s unconventional emission trading system (ETS), a rate-based tradable performance standard (TPS), on firm competitiveness. Our analysis takes advantage of the quasi-natural experiment created by China's regional ETS pilots and firm-level data on innovation and...

Using China’s regional carbon market pilots as a natural experiment, we examine the impacts of the emission trading system (ETS) on firms’ innovation and competitiveness. We show that the ETS directs innovation towards climate-friendly technologies; it increases the climate patent ratio by...