Abstract: The importance of innovation in promoting firm pollution reduction and carbon reduction, and achieving green development transformation is increasingly prominent. Unlike previous studies that focus on analyzing the impact of low-carbon city pilot policies on green technology innovation, this paper employs the difference-in-difference econometric model to empirically analyze the impact of low-carbon city pilot policy on firm innovation behavior and its mechanism by using the micro-data of industrial enterprise database and patent application database from 2006 to 2013. Regression results show that the implementation of low-carbon city pilot policy significantly improves firm strategic innovation but has no significant impact on substantial innovation. After a series of identification tests, robustness checks, and different estimation methods, the above conclusion still holds. Heterogeneity analyses show that the implementation of low-carbon city pilot policy has a more significant impact on the strategic innovation of non-SOEs and firms in polluting industries. The mechanism analyses based on the transmission effect model indicate that under the support of low-carbon city pilot policy, firms engage in strategic innovation to seek government subsidies. The research findings have certain reference value for exploring the development path led by "dual carbon" and driven by innovation.

Key words: low-carbon city pilot policy, substantial innovation, strategic innovation, government subsidy, environmental regulation