The Impact of Chinese Carbon Emissions Trading System on Efficiency of Enterprise Capital Allocation: Effect Identification and Mechanism Test
Round 1
Reviewer 1 Report
Carbon Emissions Trading System and Efficiency of Enterprise Capital Allocation: Effect Identification and Mechanism Test
The carbon emissions trading system, which is a policy tool, was created to reduce total carbon dioxide emissions from covered sectors in a jurisdiction in a cost-effective and controlled manner, while at the microeconomic level, incentives are created for covered entities within the system to reduce their emissions by switching from high-polluting production technologies to green and low-carbon technologies. There is not much literature on the microeconomic impact of carbon trading because there are many determinants to consider and a lack of transparency and data. In my view, this paper presents a compelling and understandable way to measure the impact of emissions trading on the efficiency of covered firms by measuring capital allocation efficiency using a multi-period DID model. A positive relationship was found between the emissions trading system and the capital allocation efficiency of firms, with carbon trading market activity and government efficiency having a positive and strengthening influence on this relationship. This means that if active trading is promoted through lower transaction costs and improved liquidity, and government monitoring and enforcement is improved, emissions trading will have a more positive impact on the capital allocation efficiency of enterprises, which in turn forms another advantage of the emissions trading system besides the cost-effectiveness and controllability of emission savings. The positive results support both implementation and expansion of the emissions trading market.
To enhance the introductory part, the authors must mention that environmental upgrading in China could be also theoretically explained using the theoretical explanations of the Environmental Kuznets Curve. To this end, refer briefly to the following sources:
- https://www.cambridge.org/core/journals/environment-and-development-economics/article/abs/demystifying-the-environmental-kuznets-curve-turning-a-black-box-into-a-policy-tool/3410AAB71BDA7A3D6C819B8E1F3ACE14
- https://www.mdpi.com/2071-1050/12/9/3880
- https://www.mdpi.com/1996-1073/13/15/3956
Author Response
Response to Reviewer 1 Comments
Point: To enhance the introductory part, the authors must mention that environmental upgrading in China could be also theoretically explained using the theoretical explanations of the Environmental Kuznets Curve. To this end, refer briefly to the following sources:
Response : Thank you for your unselfish suggestions for this article. After carefully reading the three documents you provided, we found that China's environmental level improvement and environmental regulation policies can be explained using the Kuznets curve. Various institutional factors can affect the shape of the Kuznets curve, reduce the information asymmetry in the implementation of environmental policies, and promote the effective allocation of environmental resources to micro entities. The specific analysis content is added to the second paragraph of the introduction. Please refer to the attachment for specific modifications.
Reviewer 2 Report
In my opinion, it would be important to state clearly in the title and the abstract that the research is essentially about China.
I consider it a fundamental shortcoming of the literature review that it does not address the fundamental critique of the emission trading system. There are many references to this, for example in the Ecological Economics journal.
In my opinion, the research itself is a well-defined and valuable material, but a critique of the theory and a clear delineation of the study is still missing.
Author Response
Response to Reviewer 2 Comments
Point: In my opinion, it would be important to state clearly in the title and the abstract that the research is essentially about China.
I consider it a fundamental shortcoming of the literature review that it does not address the fundamental critique of the emission trading system. There are many references to this, for example in the Ecological Economics journal.
In my opinion, the research itself is a well-defined and valuable material, but a critique of the theory and a clear delineation of the study is still missing.
Response : Thank you for your unselfish suggestions for this article. First of all, we should clearly explain the background of your proposal on China. We changed the title to "The Impact of Chinese Carbon Emissions Trading System on Efficiency of Enterprise Capital Allocation: Effect Identification and Mechanism Test", and modified the practice background of this article in the abstract. Secondly, after re examining the literature review, the author found that this paper lacked an explanation of the current defects of China's carbon emission trading and its negative impact on enterprises, which led to the lack of objectivity of the article's views. Therefore, on the basis of consulting the relevant literature, the author supplements the relevant content in the third paragraph of the literature review. Please refer to the attachment for specific modifications.
Reviewer 3 Report
The article is devoted to the actual topic of researching the connection between Carbon Emissions Trading System and Efficiency of enterprise Capital Allocation.
The article is organized in accordance with the requirements of the journal, written in good scientific language. The references is sufficient to highlight current research on the subject.
There are a number of comments on the article:
1) on page 9, the authors present a system of simultaneous regression equations, but the method for estimating the parameters of this equations system is not described. The quality of the article would improve significantly if authors outline the method for identifying the parameters of the system (4)-(9)
2) Table 2 presents the results of the regression analysis. However, it is not clear how the authors chose the variables they included in the model, whether multicollinear factors were taken into account.
3) On page 12, in the "Empirical results" section, the investment model (11) appears. However, this model is absent in the theoretical model (Fig. 1, model (4)-(9). In order for the reader to better understand the authors' methodology, I recommend adding this model to the author's methodology.
Author Response
Response to Reviewer 3 Comments
Point: The article is devoted to the actual topic of researching the connection between Carbon Emissions Trading System and Efficiency of enterprise Capital Allocation.
The article is organized in accordance with the requirements of the journal, written in good scientific language. The references is sufficient to highlight current research on the subject.
There are a number of comments on the article:
1) on page 9, the authors present a system of simultaneous regression equations, but the method for estimating the parameters of this equations system is not described. The quality of the article would improve significantly if authors outline the method for identifying the parameters of the system (4)-(9)
2) Table 2 presents the results of the regression analysis. However, it is not clear how the authors chose the variables they included in the model, whether multicollinear factors were taken into account.
3) On page 12, in the "Empirical results" section, the investment model (11) appears. However, this model is absent in the theoretical model (Fig. 1, model (4)-(9). In order for the reader to better understand the authors' methodology, I recommend adding this model to the author's methodology.
Response : Thank you for your pertinent comments and selfless suggestions on this article. The following modifications and explanations have been made to the three suggestions you have put forward:
1.As the simultaneous equation here is a multivariate linear regression equation, the least square method is used for estimation of the parameters of the regression equation in this paper. This explanation is supplemented by the specific description of variables after equations (4) - (9).
2.With regard to the selection of control variables in this paper, after consulting the relevant literature, the author has made a detailed description of the relationship between these control variables and the efficiency of enterprise capital allocation, which is supplemented by the specific description of control variables in "4.2. Model Setting and Variable Descriptions".
3.For the model (11) in this paper, the variables calculated here are mainly intended to replace the original enterprise capital allocation efficiency variables and replace them into the original equation for regression. If we can get the result that carbon trading can improve the efficiency of corporate capital allocation, then it proves that the original regression result is stable. If this equation is put into "(Fig. 1, model (4) - (9).", it is contrary to the role of this equation. Please refer to the attachment for specific modifications.
Round 2
Reviewer 1 Report
The paper has been substantially improved and can be published now.
