Does industrial agglomeration improve effective energy service: An empirical study of China's iron and steel industry

The iron and steel industry is the critical sector for energy consumption and CO2 emissions in China. From the perspective of industrial agglomeration, this paper explores how much energy is transformed into effective work from 1997 to 2016. The location entropy index is constructed to represent industrial agglomeration, and the DEA model is introduced to capture the iron and steel industry's effective energy service. Then, we apply the panel threshold model to identify the nonlinear relationship between agglomeration and effective energy service. The empirical results show that the iron and steel industry exhibits agglomeration characteristics, with the average location entropy index exceeding 1. The effective energy service experiences a rise and then a fall over the sample period. Besides, industrial agglomeration promotes effective energy service by infrastructure sharing, knowledge spillovers and internal market competition. With the economic growth, the positive influence of agglomeration on effective energy service is increasing. Based on the results, we put forward suggestions to improve the iron and steel industry's effective energy service.