Carbon Emission Effects Of Resource Allocation: Theoretical Models And Empirical Evidence

Since the industrial revolution,the usage of fossil fuels has caused continuous global warming.The climate conditions and ecological environment are undergoing irreversible changes,threatening the survival and development of human beings.How to effectively reduce carbon emissions and mitigate climate change are critical issues for human society.As the world’s second largest economy and the largest carbon emitter,China is committed to addressing global climate change,actively promoting low-carbon development,and has officially pledged to reach carbon peak by 2030 and achieve carbon neutrality by 2060 at the 75th General Debate of the United Nations General Assembly.But currently low-carbon technologies in China are not yet mature,and both light and heavy industries still heavily rely on traditional fossil fuels.Rapidly promoting the low-carbon transformation not only entails high transition costs but also shocks industrial systems and economic order.Against this backdrop,exploring a path that can effectively balance carbon emission and economic growth under existing technology is of significant importance for achieving the carbon neutrality.Misallocation theory provides a feasible solution.Resource allocation has been proven to have important impact on the total factor productivity.Currently,there is still a serious misallocation in China’s industry,with a large amount of production factors concentrated in low-efficiency and high-emission enterprises.Therefore,optimizing resource allocation is expected to achieve economic growth and carbon reduction simultaneously,providing a high-quality and low-emission development path.The central government also attaches great importance to resource misallocation,emphasizing "building a competitive and orderly market system,deepening the reform of factor market,and improving the efficiency of factor allocation to promote the quality change of economic development".Although some scholars have discussed the carbon emission effect of resource allocation,the theoretical discussion is deficient,and the research content and methods are insufficient.Thus,this study attempts to combine misallocation theory and externality theory and sustainable development theory,and construct a three-factor misallocation model to reveal the theoretical connection between resource allocation and carbon emissions.Then,we conduct fixed effects model,instrumental variables model,difference-in-difference model and other empirical methods to confirm theoretical expectations and provide policy recommendations for carbon neutrality strategy.First,this paper explores the theoretical connection between resource allocation and carbon emissions.By introducing energy factor and carbon emissions into the misallocation model,and conducting counterfactual analysis based on "province-industry" data,we find that optimizing resource allocation can achieve the dual benefits of economic growth and carbon emission reduction.The heterogeneity analysis shows that eliminating product distortions has obvious emission reduction effect,eliminating capital distortions can simultaneously reduce carbon emissions and promote economic growth.At the same time,eliminating misallocation within regions and industries can also achieve carbon emission reduction,as well as maintain a reasonable industrial structure and balanced development between regions.In addition,we further identify the market-oriented factors affecting resource allocation in China and examine the emission reduction effects brought by improvements of these factors.Second,this paper empirically tests the impact of resource allocation efficiency on carbon emissions at city level.Cities are the main policy body for implementing emission reduction targets.We calculate the city-level resource allocation,and identify its impact and mechanisms on carbon emissions.We find that resource allocation has a significant negative effect on carbon emissions,indicating that optimizing resource allocation has emission reduction effect,consistent with theoretical expectations.The mechanism analysis shows that resource allocation primarily involves reducing the proportion of high-carbon industries and promoting green technology innovation to reduce carbon emissions.Heterogeneity analysis reveals that resource allocation has more significant effect on carbon emission in technologically-advanced eastern cities,while its effect is relatively weaker in resource-dependent cities and old industrial bases with lower marketization levels.Finally,this paper empirically examines the impact of electricity resource misallocation on thermal power plants’ carbon emissions.Electricity is the main carbon emitting sector in China,therefore,we calculate the misallocation degree and carbon emissions at the thermal power level,test the causal relationship between them,and further discuss the resource allocation effect and emission effect of electricity market reform.We find that misallocation among thermal plants significantly increases carbon emissions.Heterogeneity analysis reveals that product distortion is the main reason for power resource misallocation promoting carbon emissions,and carbon emissions in private and advanced-technology power plants are more vulnerable to power resource misallocation.In addition,regional marketization level mitigates the carbon emission effects of thermal power resource misallocation.Further discussion shows that the direct power purchase policy replaces the original power dispatch system with direct power trading,which not only effectively improves power resource allocation efficiency,but also significantly reduces sector’ carbon emissions.Compared with the previous research,the innovation of this paper lies in:Firstly,innovation for research perspectives.Despite literature stressing the important impact of resource allocation on economic development,there has been limited research on the role of resource allocation in carbon emissions.This paper theoretically and empirically illustrates the intrinsic link between resource allocation efficiency and carbon emissions,points out that improving resource allocation can realize the double dividend of productivity growth and carbon emission reduction,proposes an effective path to balance economic growth and carbon emissions under the existing technology level.We also provide a new basis for the national design and implementation of low-carbon development strategies,and enriches the research on low-carbon development paths.Second,innovation for theoretical model.The classical resource misallocation model sets manufacturers to input labor and capital in production,but does not consider energy inputs that produce large amount of carbon emissions,and thus cannot discuss the correlation between energy factors,carbon emissions and resource allocation in depth.This paper constructs a three-factor resource misallocation model including energy inputs,which extends the connotation of resource allocation,and introduces carbon emissions into the model through energy inputs,extending the classical model in the context of real-life problems.At the same time,this paper also identifies the factors affecting resource misallocation and analyzes the changes of total output and carbon emissions with the three-factor model,providing a simple discussion framework for assessing the economic and environmental impacts of related policies.Third,innovation for empirical methods and mechanism discussion.The empirical studies on resource misallocation are relatively insufficient,and the endogeneity problem among them has not attracted enough attention.In this paper,the instrumental variables of resource allocation are constructed based on the urban dialect pieces in the city-level study,and the subsidy income are used as instrumental variables in the discussion of thermal power plants,alleviating the endogeneity problem and provide methodological reference for subsequent studies.Meanwhile,there is little literature discussing the mechanism of resource allocation affecting carbon emissions.In this paper,theoretical analysis is carried out in the context of literature and reality,and potential mechanisms of action are sorted out from four aspects: industrial structure,energy structure,energy efficiency and technological progress,and empirical tests are conducted to build a complete mechanism framework for the emission reduction effect of resource allocation.This paper explores the relationship between resource allocation and carbon emissions from both theoretical and empirical perspectives,enriches the theoretical study of low-carbon development paths,and introduces the carbon emissions into the theoretical framework of resource misallocation,which is innovative in terms of research perspectives,theoretical models,empirical methods and mechanism discussions.Also,this paper reveals the carbon emission reduction effect of resource reallocation,which provides reference for the design of low-carbon development and energy transition policies,and also provides theoretical support for the joint promotion of carbon neutral strategy and high-quality development strategy.Overall,this paper has important theoretical value and practical significance.