Unlocking synergy: The coevolution mechanism of enterprises' green innovation decisions under China's energy-saving regulations

Abstract

Energy-saving regulations are commonly implemented in developing countries to reduce energy consumption and enhance efficiency. Yet, their effectiveness is often limited as regulated enterprises may prioritize output reductions over enhancements in energy efficiency due to the regulations' failure to incentivize green innovation. Prior research debates the direct impacts of such regulations on green innovation, with mixed findings, often overlooking the competitive dynamics between enterprises and indirect impacts on unregulated enterprises, which can bias results and harm overall energy conservation efforts. In this study, using China's two national energy-saving initiatives as prototypes, we introduce a two-player evolutionary game model to analyze both the direct and indirect impacts of these regulations. This model deconstructs competitive dynamics into production competition and green innovation competition, and identifies key conditions under which regulations can achieve dual goals, highlighting a strong convergence effect and an appropriate regulatory intensity that slightly below the threshold. Through heterogeneity and sensitivity analyses, our findings suggest that targeting enterprises with high energy efficiency, industries with significant market concentration, enhancing innovation intention before regulation, and amplifying the market benefits of green innovation effectively promote green innovation. Our framework offers insights for optimizing energy-saving regulations to unlock synergy between reducing energy consumption and enhancing energy efficiency, as well as fostering green innovation among both regulated and unregulated enterprises.