Can carbon emissions trading improve corporate total factor productivity?

This paper first researches the influence of carbon emissions trading (CET) on corporate total factor productivity (TFP) from three aspects of innovation effect, factor allocation effect and cost effect, and then uses the data of listed corporations from 2008 to 2021, and empirically analyzes each effect by multi-temporal difference-in-difference-in-difference (DDD) model. We find that CET can suppress the corporate TFP through direct effect (cost effect), and improve corporate TFP through indirect effects (innovation effect and factor allocation effect). Overall, the indirect effects are more effective. Moreover, the CET can significantly improve corporate TFP, and it is still true after a set of robustness checks. Heterogeneity analysis indicates that CET has a different influence on different types of corporate TFP, and there are also certain differences in their mechanisms.