The impact of carbon emissions trading on innovation bubbles in manufacturing enterprises.

Carbon trading plays an important role in improving the quality of technological innovation and suppressing innovation bubbles. We use patent data and financial data from Chinese firms from 2010 to 2021 and apply a difference-in-differences-in-differences (DDD) model to analyse the causal relationship between the carbon trading and technological innovation of manufacturing firms to demonstrate the inhibitory effect of manufacturing firms' participation in carbon trading on innovation bubbles and to consider the synergistic effect of government intervention. The conclusions of the study are as follows. First, the participation of manufacturing enterprises in carbon trading increases their R&D investment, which does not increase the quantity of innovation but significantly improves the quality of their innovation, thus suppressing the creation of innovation bubbles. Second, government intervention can effectively play a synergistic role in improving the quality of technological innovation in manufacturing enterprises. Finally, the impact of carbon trading on technological innovation is more pronounced for large enterprises and high-tech manufacturing enterprises.