Taking China’s SO₂ emissions trading pilot (ETP) in 2007, a large-scale market-based environmental regulation as its target, this paper reexamines the strong Porter hypothesis by adopting the method of propensity score matching-differences-in-differences. Research shows the following results: first, SO₂ ETP which provides high flexibility for enterprises in the process of emission reduction, improves total factor productivity (TFP) significantly on the whole. Second, the productivity effect of market-based environmental regulation varies from the productivity level of enterprise. For example, the SO₂ ETP has a significant effect on TFP only at 40–80 percent quantile of TFP, and the effect increases at first and then decreases. Third, the financing constraints and bargaining power of enterprises have significant negative moderating effects on the impact of SO₂ ETP on TFP, and the moderating effects between state-owned and non-state-owned enterprises exist heterogeneity. In conclusion, it provides reference for the formulation of market-type environmental regulations and the realization of high-quality development for developing countries.

This study examines the non-linear effect of financial support on energy efficiency for 30 provinces in China, over the period 2003 to 2016. Specifically, we find that technological progress is a key factor in improving energy efficiency, regardless of the transition variable or sample chosen. The non-linear effects of the support of different financial sectors on energy efficiency are different. Banks have the greatest positive impact on energy efficiency, but as economic and financial development levels increase, this impact will diminish. The impact of securities on energy efficiency is contrary to bank support, because as the level of economic and financial development increases, the impact of securities on energy efficiency will shift from negative to positive. The impact of insurance support on energy efficiency is not significant.