The spatial spillover effect of low-carbon city pilot scheme on green efficiency in China's cities: Evidence from a quasi-natural experiment

To test the direct effect (impact on local) and indirect effect (spatial spillover) of low-carbon city pilot scheme (LCCPS) on China's cities' green efficiency, this paper first calculates and decomposes the green efficiency constrained with CO2 emissions and pollutants by using a range directional model (RDM) based on data envelopment analysis (DEA), then the global Malmquist-Luenberger (GML) index of 285 China's cities' green efficiency is obtained. Through the GML index, it is found that the green efficiency of sample cities has improved by 29.56% evenly in 2003–2017, and the main driving force of green efficiency progress is technological innovation. The green efficiency progress of LCCPS pilot cities is significantly greater than that of non-pilot cities, and there is a significant positive spatial autocorrelation in the green efficiency of 285 sample cities. According to the test results of the spatial difference in differences (Spatial-DID) model, LCCPS can positively promote the green efficiency of local and neighboring cities, and this result can pass the placebo test, and remain robust when using an alternative green efficiency index (without CO2 emissions) or a spatial-economic weight matrix. The use of propensity score matching (PSM) and instrumental variable method further shows that the above results will not change substantially even if the selection bias and endogeneity are eliminated. The mechanism analysis shows that: First, LCCPS improves the local green efficiency by promoting the aggregation of innovation resources, but the resulting siphon effect inhibits the aggregation of innovation resources and the green efficiency progress in neighboring cities. Second, LCCPS improves the local green efficiency of pilot cities by inhibiting the industrial activities and industrial energy consumption, but it can inhibit the green efficiency progress by increasing industrial activities and industrial energy consumption of neighboring cities. Although the above mechanism cannot completely reverse the beneficial space spillover effect of LCCPS, it can also effectively point out the future improvement direction of the policies in LCCPS.