Dual-circulation: influence mechanism of ETS's carbon reduction and its spatiotemporal characteristics based on intensity modified SDID model.

Traditional DID models overlook variations in policy intensity, causing estimation deviations from the actual situation and a limited understanding of the influence mechanism. In response, the Intensity Modified SDID Model is built to examine the influence mechanism of ETS's carbon reductions. Moreover, through model extensions, the study explores the spatiotemporal characteristics and heterogeneities of ETS's effects. Results show that: (1) "Dual-circulation" influence mechanism is confirmed, where ETS directly contributes to carbon reductions (2.70% to 10.0% impact) through external pathways, and internal pathways continuously strengthen reduction effects, comprehensive mechanisms are thereby formed and enhanced based on interaction among internal and external pathways. (2) Reasonable ETS levels are estimated and proposed to achieve "Dual Carbon Target", constraining nationwide carbon quotas by 20 billion tons/year, increasing carbon trading volumes by 80 thousand tons/year, and elevating the carbon trading prices by 100 RMB (14 USD) per ton. (3) ETS's carbon reduction effects are identified with temporal and spatial characteristics, temporally, effects peak in the 4th period (Event+4) but diminish in the 5th period (Event+5), spatially, effects peak in areas distancing around 1000 km but disappear beyond 1500 km. (4) ETS also has synergistic effects with atmospheric pollution reduction, including industrial emissions of sulfur dioxide and smoke (dust), but are insignificant to industrial emissions of wastewater and solid waste.

Market or regulation? The competition effect between green finance and environmental enforcement on environmental quality and its "dominate-follow" pattern.

Current research on environmental instruments often isolates the two mainstream types, market-based and regulation-based, overlooking their real-world interactions. In response, the intensity gap variable (EII_GAP) is constructed to link various instruments into a united system. Thus, based on the spatial econometrics of the spatial panel Durbin model (SPDM), the collective effects between market- and regulation-based environmental instruments on environmental quality are explored. Moreover, the political strategies for maximizing environmental benefits are discussed. Results show that the interaction pattern between market- and regulation-based environmental instruments on environmental quality is characterized by competition rather than cooperation. A unit widening in the intensity gap leads to 17 to 18% and 12 to 18% units of environmental quality improvement in local and adjacent areas, respectively. Furthermore, the "dominate-follow" approach as the most effective mode for maximizing environmental effects is proposed. This study recommends employing one type of instrument as the dominant while the other as the auxiliary. In provinces where one kind of environmental instrument takes domination, the environmental quality could be increased by around 8 to 113% after taking another contrary instrument as the auxiliary.