How the national unified market initiative shapes enterprises’ emissions: evidence from China

This paper examines how the national unified market initiative influences enterprises’ emission reduction strategies and pollution levels in China, using the China Industrial Enterprise (CIE) and Industrial Enterprise Pollution (CIEP) databases. Our findings show that within a nationally unified market, enterprises tend to reduce emission intensity while maintaining output, as evidenced by SO 2 emissions. The unified market encourages firms to adopt process-based emission reductions over end-of-pipe solutions. Heterogeneity analysis indicates that these effects remain significant for medium- and large-sized enterprises, capital-intensive firms, local government-owned enterprises, and those in western China. Robustness checks confirm the findings across various tests. Mechanism analysis reveals that firms prioritize technology upgrades and cleaner energy sources over production cuts or mere energy efficiency improvements. These insights offer crucial policy guidance for designing market mechanisms that enhance environmental performance.