How does industrial relocation affect carbon emissions? Evidence from Chinese cities

Based on the 274 prefecture-level cities in China from 2006 to 2022, this paper comprehensively investigated whether the National Industrial Relocation Demonstration Zones (NIRDZ) policy increases the undertaking regions' carbon dioxide (CO2) emissions level. Using propensity score matching and the difference-in-difference approach (PSM-DID), the main conclusions of this study are as follows: First, establishing a demonstration area can significantly reduce the level of urban CO2 emissions. Second, the mechanism analysis found that the NIRDZ policy can reduce CO2 emissions through "scale effects," "technology effects," "structural effects," and "market effects." Finally, the effect of the NIRDZ policy can vary depending on the strength of environmental regulation and the types of initial resources. This study provides important insights for urban carbon reduction initiatives.