Can The Emission Trading Policy Achieve A Win-Win Of "Emission Reduction" And "Efficiency Increase"

As a market-based environmental control measure,the emission trading policy can theoretically solve the problem of inefficient allocation and release huge potential for energy conservation and emission reduction.It is considered to be the best choice for solving environmental problems in China.However,after the implementation of this policy,what is the impact on the environmental quality and economical development?In this paper,we use the biennial weight modified directional distance function and Luenberger productivity indicators to calculate and decompose the total factor productivity of China's 280 cities from 2003 to 2014.Secondly,this paper uses difference in difference to test whether the emission trading can achieve a win-win of"reducing pollution"and"increasing efficiency"and then conducts a series of robustness tests.This study finds:whether in the non-pilot period or in the pilot period,the real GDP in the pilot areas is larger than that in the non-pilot areas,but the simple multiples relationship between them is not much different.For SO₂,the simple multiples relationship reduces from1.672 times to 1.592 times after the pilot,it shows that the emission trading has released the environmental dividend,but it has not promoted economic growth.From 2003 to 2014,China's total factor productivity has been generally raised with the average growth rates of 2.68%and1.98%before and after the policy,respectively.And the decline of the average growth rate is mainly due to the deterioration of efficiency.The emission trading has a significant improvement on the environmental quality in the pilot areas.The policy reduced sulfur dioxide emissions and concentrations by 11.2%and 10.1%,but it does not have a significant impact on economic output to create more economic dividends.In addition,this paper verifies that the regression coefficient of emissions trading policy on total factor productivity is significantly negative,the Potter hypothesis has not been realized,and it is also found that the negative effect of this policy on total factor productivity is to reduce efficiency rather than technological progress,and the robustness tests confirm the reliability of the results.Therefore,the emission trading mechanism can alleviate the environmental problems to a certain extent,but if we want to realize the Porter effect,it also needs the guidance from market and government.