Can government-led urban expansion simultaneously alleviate pollution and carbon emissions? Staggered difference-in-differences evidence from Chinese firms

The outward expansion of city centers is a typical feature of rapid urbanization in developing countries, leading to complex environmental pollution effects due to evolving urban spatial patterns. This study examines the impact of government-led urban expansion on pollution and carbon emissions by firms, utilizing firm and city-level data. Employing the staggered difference-in-differences (DID) method and taking the county-to-district conversion (CDC) as a quasi-natural experiment, the study finds that CDC reduced SO₂ emissions by 80.95% and CO₂ emissions by 13.12%. The key to this synergistic emission reduction lies in a series of source control strategies, including enhancing energy efficiency and innovation, industrial restructuring, and production reduction. Furthermore, the study reveals that CDC has a more significant effect on emission reduction for NOEs and small firms. Additionally, large cities, cities with high fiscal self-sufficiency, and cities with high per capita GDP exhibit greater environmental regulatory strength, leading to more effective emissions reduction. This paper seeks to explore potential gaps in research on the environmental impacts of government-led urban expansion, and it may provide empirical support for relevant policies in developing countries.