Does China's carbon emissions trading scheme affect the market power of high-carbon enterprises?

The market power represents market competitiveness and investment development opportunities for the enterprise. Carbon emissions trading scheme (ETS) increases the internal operation costs of enterprises, and changes the external development environment, so as to affect the market power of high-carbon enterprises. With this in mind, using the panel data of A-share listed high-carbon enterprises in China during 2009-2019, this paper applies the difference-in-differences method and mediating effect model to estimate the impact of China's ETS on the market power of high-carbon enterprises. We can find that: first, the implementation of China's ETS until 2019 has generally led to a 26.99% decline in the market power of high-carbon enterprises. Second, China's ETS has a negative impact on the market power of relevant enterprises mainly through reducing the level of horizontal integration but not vertical integration. Third, it has a significant negative impact on the market power of relevant enterprises in the petrochemical and chemical industries, but not in other six industries concerned. Meanwhile, its negative impact on the market power of state-owned enterprises, and high financing constraints and large-scale enterprises is relatively significant, and the impact on the reduction of market power level of high-carbon enterprises in regions with high carbon prices and high transaction scales is relatively obvious.