The diminishing marginal effect of R&D input and carbon emission mitigation

Larry Li, Adela McMurray, Xiaomeng Li, Yuning Gao, Jinjun Xue

Research output: Contribution to journalArticlepeer-review

23 Citations (Scopus)


Evidence shows that a variety of macroeconomic and firm level factors have a positive impact on carbon emission mitigation. However, little is known regarding the comprehensive effect of research and development (R&D) input on a firm's environmental performance. Using a data set comprised of public firms operating in 52 countries from 2002 to 2015, this paper investigates the effect of R&D input on carbon emission mitigation. Our finding shows that while R&D input remains one of the most important approaches for mitigating carbon emission, the marginal effect of technological progress on carbon emission reduction tends to decrease. Furthermore, there is an inverted U-shaped relationship between R&D input and carbon emission reduction, where the turning point is established when the R&D input reaches 22.91% of a firm's operational expenses. To maintain a sustainable emission reduction effect, a dynamic technological progress model with sustainable marginal effects is developed and offers a new policy option for continued efforts to meet carbon emission reduction targets.

Original languageEnglish
Article number124423
Number of pages14
Publication statusPublished - 1 Feb 2021
Externally publishedYes


  • Carbon emission mitigation
  • Diminishing marginal effect
  • R&D input
  • R&D input optimal level


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