Can policy-induced fair competition promote firm cooperative green innovation? Evidence from China’s Competition Review System

Amid the global pursuit of sustainable development, aligning competition policy with green innovation has become an important institutional challenge. This study examines the impact of China’s Fair Competition Review System (FCRS) on firms’ cooperative green innovation (CGI), using a quasi-natural experiment based on panel data from Chinese A-share listed firms from 2011 to 2023, excluding the 2016 transition year. The results show that firms in regions with greater pre-policy market segmentation experience larger post-FCRS increases in CGI, whereas independent green innovation does not change significantly. The increase is evident in both firm-firm and firm-university/research-institute co-patenting. The effect is stronger in regions with higher marketization, areas where the FCRS is embedded in government performance assessment, and among high-tech and state-owned enterprises. Channel tests are consistent with improved green innovation disclosure, stronger market competition, and lower transaction-related cost burdens. Further analysis shows that the FCRS reduces inefficient investment, increases environmental investment and narrows green total factor productivity gaps. Its effect is also strengthened by low-carbon city policies, environmental taxation and green credit policies. These findings highlight the role of fair competition policy in supporting cooperative green innovation and green transformation.