How does the digital economy enhance carbon efficiency? A study from the perspective of market distortions

To elucidate the mechanism through which the digital economy enhances carbon efficiency, this paper analyzes it from the perspective of market distortion. It constructed a causal mediation model, a dynamic spatial panel Durbin model, and a quantile regression model, utilizing panel data from 282 prefecture-level cities spanning from 2011 to 2021. The findings indicate that the digital economy significantly enhances carbon efficiency. This conclusion remains robust following endogenous tests and multiple robustness tests. Further mechanism analysis emphasizes the reduction of market distortions in the product market as a crucial factor, acting as a primary pathway through which the digital economy enhances carbon efficiency. Subsequent sensitivity analysis confirms the robustness of the mediating effect. Regarding the spatial spillover effects of the transmission mechanism, the digital economy has not only significantly enhanced total factor carbon efficiency ( tfce ) in neighboring cities but has also alleviated product market distortions in these regions. With respect to the heterogeneity of transmission mechanisms, as the carbon efficiency level of a region increases, the impact of the digital economy on improving carbon efficiency becomes more pronounced. Furthermore, as the degree of distortion in the product market rises, the digital economy's effect on mitigating this distortion follows an inverted U-shaped pattern, initially intensifying before gradually weakening. This comprehensive analysis of the transmission mechanism offers a novel perspective for systematically understanding the role of the digital economy in enhancing carbon efficiency and provides valuable pathways and policy insights for advancing carbon peaking and carbon neutrality.