This paper studies how the carbon emission trading system (ETS) pilot policy announced in 2011 affects firm dynamics, including entry, exit, and innovation. Using a difference-in-difference-in-differences empirical strategy, we find that in pilot cities, in targeted sectors, and after the policy...

We provide the first theoretical and empirical study on how the carbon emission regulation affects firm dynamics, including entry, exit, and innovation. Using a difference-in-difference-in-differences empirical strategy, we find that in low-carbon zone pilot cities, in carbon-intensive sectors,...

We (re)evaluate the general-equilibrium effects of (environmental) policies from the perspectives of input-output networks and firm dynamics. Using China's carbon emission trading system (ETS) as an example, we find that ETS leads to more patent applications, especially the ones associated with...