## 2 Literature Review  
The ultimate effect of an ETS has always been a topic of discussion in the academic community. As with other environmental regulation policies, scholars are focused on whether an ETS can simultaneously generate economic dividends while reducing carbon emissions, thus achieving sustainable social development. Early neoclassical economics suggested that environmental regulations had negative impacts on a country's economic welfare [11; 12]. However, [PERSON], whose work was based on dynamic standards in 1991, believed that reasonable environmental regulations could encourage enterprises to optimize their resource allocations and conduct technological innovation, thus stimulating the \"innovation compensation\" effect. The benefits\" of such technological innovation could both offset the costs of complying with environmental regulations and achieve a win-win situation between the environment and the economy by improving productivity and international competitiveness. The main studies on the validity of ETS, based on the \"[PERSON] hypothesis,\" are as follows. [PERSON] et al. simulated the national ETS scenarios of China by applying the stochastic frontier approach (SFA), the difference model, and nonlinear programming, and their conclusions show that the interprovincial carbon emissions could be decreased by 19.79% while the carbon intensity was decreased by 25.24% under the constraints of GDP output, economic growth, and environmental regulation [13]. [PERSON] et al. used the panel data of 30 provinces in China and adopted the PSM-DID method to study the effect of the China ETS provincial pilot project, and the conclusion showed that a win-win situation between the environment and the economy can be achieved; thus, the goal of low-carbon economic transformation can be successfully accomplished [14]. [PERSON] et al. adopted the same method to study the China ETS pilot, and they found that the policy could reduce the carbon intensity in the pilot regions by an average of 0.026 tons/RMB 10,000 yuan per year. It was also found that the impact of the industrial structure on carbon intensity was greater than those on the energy structure and energy intensity [15]. [PERSON] et al. adopted the DID and DEA models separately to analyze whether China's ETS pilot policy could generate both environmental and economic welfare improvements. The study showed that the ETS could significantly reduce the carbon emissions in the pilot regions in the short term, but it could not promote GDP growth. In the long run, the ETS could achieve economic welfare and environmental welfare improvements, thus achieving the \"Porter effect\" [16]. [PERSON] et al. focused on environmental innovation and estimated the effect of environmental innovation and the initial carbon emission trading (CET) Plan on emission reduction by using the system generalized method of moments (SGMM) and the PSM-DID model, respectively [17]. The study shows that the energy efficiency, innovative knowledge, and innovative resource factors can hinder carbon emissions, and there is a lag period in the carbon reduction effect from environmental regulations. From the perspective of different industries, scholars have studied the impacts of ETS on different industries and human behavior. It is generally believed that an ETS can significantly reduce pollution and promote sustainable development [18; 19; 20; 21; 22; 23]. Some scholars also studied the efficiency of China's ETS pilot provinces and cities with respect to the carbon price. Although inefficiency generally exists, the efficiency of most pilot provinces and cities increases over time [24; 25; 26; 27; 28; 29]. Existing studies mainly focus on evaluating the mechanism of the effect of an ETS on the carbon intensity, carbon emissions, and GDP. The literature related to industries is mostly analyzed from a single industry perspective.