The Chinese digital platform giants – Baidu, Alibaba and Tencent – have quickly risen to be amongst the most notable developers and users of artificial intelligence. One important catalyst for this development has been the so-called Platform Business Group (PBG) strategy used by Chinese...

We estimate air pollution’s causal effect on firm innovation based on a nationwide sample of Chinese manufacturing firms. Using thermal inversion as instrument, we show that air pollution significantly reduces innovation: the total loss in new product value for our sample firms amounts to...