We build a general equilibrium model to study how climate transition risks affect energy prices and the valuations of different firms in the energy sector. We consider two types of fossil fuel firms: incumbents that have developed oil reserves they can extract today or tomorrow, and new entrants...

Encouraging enterprises to engage in green innovation is an effective way to reduce carbon emissions from production. As one of the largest carbon emitters, China has launched policies to achieve carbon peaking and neutrality, also known as China’s dual carbon policy. However, existing...

In a model where firms face a continuous choice of how much to invest in environmental innovation, we show that an ever stricter environmental policy does not always lead to ever cleaner production methods and ever lower production of polluting goods. It does so when the abatement technology is...