How does innovative city policy break carbon lock-in? A spatial difference-in-differences analysis for China

Innovative cities, as spatial containers of innovation, help to accelerate the agglomeration of innovation factors. Hence, they tend to rely on knowledge, science, and technology, rather than traditional energy to realize development. Based on a panel dataset of 283 Chinese cities for the period 2003–2017, we empirically investigate the impact of innovative city policy (ICP) on carbon lock-in (CLI) using the spatial difference-in-differences (SDID) method. Moreover, we examine the direct and indirect spillover effects of this policy. We also discuss the dynamic effect, heterogeneity, mediating mechanisms, and the spatial effect within different distance bands. We find that: (1) accelerating innovation in cities can not only mitigate CLI locally, but can also inhibit CLI in neighboring cities; (2) both short-term and long-term policy effects are verified, and ICP shows a long-lasting policy effect with more impetus; (3) ICP has a greater restraining effect on CLI in cities that are non-resource based, have smaller populations, and higher physical, human, and social capital; and (4) technology and industry structure effects are two influence mechanisms. And the policy effect attenuates when distance bands are expanded. Based on the above findings, we put forward several specific policy recommendations to boost innovation and curb CLI.