Toward low carbon development through digital economy: A new perspective of factor market distortion

The development and application of digital technology has brought profound influences on our economic development. It is therefore urgent to measure such impact on low carbon development. This study aims to measure the impact of digital economy development among Chinese provinces by using an intermediary effects model and conducting heterogeneity analysis. The results show that digital economy can facilitate low carbon development in China by alleviating capital and labor market distortions. Industrial digitization has the greatest impact, while digital industrialization has the smallest impact. Moreover, from a region perspective, digital economy is more effective to promote low carbon development in those eastern regions, while it is critical to improve the digital economy development environment in those central and western regions. Finally, several policy recommendations are raised by considering the Chinese realities.