The double-edged effect of government intervention: Spatial spillover of green and low-carbon consumption and fiscal decentralization

This is the authors' abstract. We don't add key points for this paper.

Against the backdrop of global sustainable development goals, promoting green and low-carbon consumption is vital, especially for emerging economies like China. Using panel data from 30 Chinese provinces (2009–2021), this study applies a spatial econometric model to examine the effects of government intervention. The paper introduces a “double-edged effect”: government action promotes local green consumption but may suppress that of neighboring areas. Key findings include: First, government intervention significantly boosts local green consumption, especially in regions with high pollution, low economic development, or weak marketization, yet causes negative spatial spillovers. Second, green technological innovation acts as a major transmission mechanism, while the role of social organizations is limited. Third, officials' promotion incentives and environmental corruption weaken the effectiveness of intervention. Fourth, fiscal decentralization exhibits a “double threshold effect”—its influence shifts from negative to positive as decentralization increases, becoming stronger at high levels. These insights highlight the need for a nuanced and incentive-compatible governance system to enhance sustainable consumption outcomes in complex institutional settings.