Carbon emissions, consumption structure upgrading, and high-quality economic development: empirical evidence from China

Environmental influence on the economy can be enhanced by consumption upgrading, transforming the key driver of economic development from supply to demand. This study constructs a model for consumption upgrading and applies threshold regression based on the susceptible-infectious-recovered (SIR) model, to explore the role of carbon emissions on high-quality economic development. The results reveal that the environmental input characterized by carbon emissions has an inverted U-shaped effect on high-quality economic development. A diminishing marginal rate of substitution of economic output demand to environment demand is observed during consumption upgrading. This study proves that environmental resources can assume both supply and demand roles for economic output and customers, which gradually emerge during consumption upgrading.