Impacts of carbon emission regulation and consumer environmental consciousness on green innovation

Emissions regulations as well as consumer environmental awareness (as measured by the level of attention given to private energy expenditure or altruistic low carbon manufacturing) influence firms' green innovations. However, customers will also emit carbon emissions when using the products. Motivated by these issues, we investigate the impact of emissions regulation and consumer environmental awareness on green innovation portfolios. Our conclusions show that comparing with low environmental awareness consumers only focusing on energy using costs, first, when emission cap is low, high environmental awareness consumers have positive impact on firm's economic performance; on the contrary, when emission cap is high, high environmental awareness consumers have detrimental impact on firm's economic performance. Second, when carbon cap regulation has low cap, environmental awareness consumers have no impact on firm's environmental performance, otherwise, high environmental awareness customers improve firm's environmental performance by limiting sales quantity of products. © 2021, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.