## 4 Empirical Results
### Dynamic Effect Test and Placebo Test  
The precondition of the consistency of the DID estimation result is that the treatment group and the control group conform to the hypothesis of parallel trends. That is, without policy intervention, the development trends of the outcome variables in the treatment group and the control group are consistent. In Table 6, if_2010-if_2017 in the dynamic effect model represent that the initial years of the policy implementation are set as 2010-2017, and m1 and m2 represent the emissions reduction effect and economic effect, respectively. It is found that the interaction coefficients of 2010-2013 (the years before the policy implementation) are not significant, and the coefficients of 2014-2017 (the years after the policy implementation) are all significant at the 10% level or better. The analysis shows that the coefficients of the emissions reduction effect in 2014-2017 are greater than those in 2010-2013 and much closer to the DID estimation (\(-\)10.0%), and the coefficients of the economic effect in 2014-2017 are stable between 6.1% and 6.9%. It also shows that the ETS pilot policy is achieving a win-win situation between the emissions reduction effect and the economic effect without a hysteresis effect or decreasing effectiveness in the pilots.  
To further verify the robustness of the results, a regional placebo test was conducted. That is, we assume that the other regions with similar geographical locations and development levels have actually implemented the policy, and the policy implementation time remains unchanged. If the empirical results show that the hypothetical regions can also achieve the policy effect, it cannot be considered that the policy effect of the pilot regions is due to the policy, and, vice versa, it indicates that the policy is robust. This study takes reference of the Zhou et al. method on the control group selection for the regional placebo test [15]. Thus, it was found that the provinces with higher economic growth rates, stronger environmental regulations, and higher research capabilities are more likely to be selected for the ETS pilot. Taking Shandong, Jiangsu, Anhui, Zhejiang, and Fujian provinces as the hypothetical treatment group, the initial year of the policy implementation remains unchanged. m3-m6 represent the results of the emission reduction effect without control variables, the emission reduction effect with control variables, the economic effect without control variables, and the economic effect with control variables, respectively. It is found that the Z_district, which represents the interaction coefficient of the emissions reduction effect is positive, while the Z_district of the economic effect is not statistically significant, thus proving the robustness of the previous DID estimation.  
\begin{table}
\begin{tabular}{c c c c c} \hline \hline  & \multicolumn{2}{c}{**Inc**} & \multicolumn{2}{c}{**Ingdp**} \\ \cline{2-5}  & **m1** & **m2** & **m3** & **m4** \\ \hline Z & \(-\)0.101 (\(-\)1.21) & \(-\)0.100 * (\(-\)1.80) & 0.081 (1.24) & 0.064 * (1.85) \\ lnp & & 2.393 *** (53.55) & & \\ us & & 0.019 *** (9.22) & & \\ a & & 0.165 *** (9.54) & & \\ is & & 0.013 *** (8.43) & & \\ ci & & 0.172 *** (9.54) & & \\ energs & & 0.007 *** (6.80) & & \\ environs & & \(-\)0.072 *** (\(-\)2.75) & & \\ rs & & \(-\)0.138 * (\(-\)1.81) & & \\ ri & & \(-\)0.096 *** (\(-\)4.74) & & \\ lnk & & & & 0.618 *** (20.96) \\ lnl & & & & 0.344 *** (16.08) \\ lne & & & & 0.214 *** (8.29) \\ control & no & yes & no & yes \\ province & yes & yes & yes & yes \\ period & yes & yes & yes & yes \\ R-square & 0.235 & 0.946 & 0.532 & 0.957 \\ \hline \hline \end{tabular} \({}^{*}\)_p_ \(<\) 0.05, **_p_ \(<\) 0.01, ***_p_ \(<\) 0.001.  
\end{table}
Table 5: Difference in differences (DID) estimation.