Digital Economy and Urban Low-Carbon Transition: Theoretical Model and New Mechanisms

Abstract

Urban areas are at the forefront of economic activity and notably contribute to carbon emissions. Transforming cities to low-carbon models is imperative for addressing climate change. The digital economy (DE) has emerged as a pivotal force in driving global economic progress, offering unique benefits that support urban low-carbon transitions. Despite extensive research on the correlation between DE and urban low-carbon transformation (ULCT), there remains a gap in studies utilizing mathematical models to delve into the intrinsic mechanisms and deeper impacts. This research evaluates the influence of DE on ULCT by examining data from 283 prefecture-level and above cities in China, spanning from 2011 to 2019, through both theoretical frameworks and empirical testing. The analysis reveals that DE substantially fosters ULCT, a conclusion reinforced by rigorous robustness and endogeneity checks. Notably, DE’s impact on ULCT is more significant in southern cities than in northern ones. Interestingly, while DE in the Yangtze River Delta and Chengdu-Chongqing urban clusters showed limited promotion of ULCT, it had the highest impact in the middle reaches of the Yangtze River. DE enhances ULCT through several pathways, including scale economy effect, heightened public environmental awareness effects, and increased income effects, contributing 6.64%, 9.84%, and 16.2%, respectively. Furthermore, the effects of public environmental awareness and income are particularly pronounced in southern regions, unlike in northern areas. This study not only expands the theoretical research on the relationship between the digital economy and urban low-carbon transition but also provides specific guidance and support for related policy formulation and implementation. This helps promote cities toward more environmentally friendly and sustainable development. Furthermore, the conclusions of this study have important reference value for other major polluting countries (such as the US, India, and Germany). Different countries and regions should formulate targeted low-carbon transition strategies based on their own DE development, income levels, and public environmental awareness. This will effectively promote urban low-carbon transitions, achieving a win-win situation for economic development and environmental protection.