Green complexity and CO2 emission: Does institutional quality matter

The productive capability of green products plays a key role in enhancing environmental quality. By applying the finite mixture model to a novel dataset covering 78 countries from 1995 to 2014, this paper seeks to supply the first comprehensive investigation into the nexus among green complexity (reflecting the productive capability of green products), CO2 emission and institutional quality. The principal finding of our study is that stronger productive ability of green products can decrease CO2 emission in countries with better institutional quality, while the enhancement of green complexity will cause higher CO2 emission in countries without well-functioning institution. Moreover, nearly one fifth countries in our sample have experienced the transformation in the relationship between green complexity and CO2 emission. Furthermore, there exists non-linear and heterogeneous nexuses between green complexity and CO2 emission generated by diverse sectors and energy types, separately. Finally, the green complexity can suppress CO2 emission in countries with stable government, better investment profile, strict law as well as better bureaucracy quality.