Does digital industry agglomeration improve the energy efficiency? Evidence from Chinese industrial firms.

Digital industry agglomeration involves the widespread application and clustered development of digital technology. The integration of digital technology and applications with energy has been recognized as an important means to enhance firm energy efficiency. This study delves into the impact of digital industry agglomeration on energy efficiency in firms using data from the China City Statistical Yearbook and the Merged Database of Industrial and Polluting firms from 2001 to 2010. The study findings reveal a positive effect of digital industry agglomeration on firm energy efficiency, which holds true even after conducting a series of robustness and endogeneity tests. Heterogeneity analysis indicates that the positive impact of digital industry agglomeration on energy efficiency is more pronounced in regions with low industrialization levels, digital industry agglomeration, resource cities, low energy-consuming industries, state-owned and large firms. Furthermore, the study reveals that the promotion of firm energy efficiency through digital industry agglomeration is primarily driven by scale effects, cost effects, and innovation effects. Additionally, digital industry agglomeration contributes to the reduction of energy consumption and optimization of energy utilization structure. As firm energy efficiency improves, pollution emissions are also inhibited. This research has significant implications for understanding regional development and industrial policies.