Does the agglomeration of urban producer services promote carbon efficiency of manufacturing industry?

Does agglomeration of space lead to carbon efficiency? This paper uses spatial models to analyze the impact and mechanism of producer services agglomeration on carbon efficiency of manufacturing industry based on the data from 286 prefecture-level cities and above in China. As urban spatial agglomeration is strongly influenced by the land-use policy and characterized by variegated degrees of industrial agglomeration, it shows various carbon efficiencies in China’s context. The results indicate that urban producer services agglomeration has both direct and indirect positive effects on carbon efficiency of manufacturing industry, whilst the indirect spillover effects have prominent spatial attenuation characteristics with an effective boundary of 350 kilometers. Moreover, the agglomeration of low-end producer services shows a significant positive indirect effect on carbon efficiency, whilst the high-end has both direct and indirect significant positive impacts. In addition, the direct and indirect impacts of producer services agglomeration on carbon efficiency of manufacturing industry is different under city sizes. The mechanism analysis reveals that urban producer services agglomeration improves carbon efficiency of manufacturing industry through scale, technology spillover, and competition effects. And the marginal impact of these three effects on carbon efficiency of manufacturing industry increases as the producer services agglomeration rises. Besides, among the marginal impact of these three effects, the technology spillover effect is greater than the scale and competition effects.