Digitalization and urban carbon emissions: Unraveling the mechanisms of agglomeration economics.

This study examines how digitalization promotes urban sustainability by analyzing its causal effects and mechanisms, focusing on the impact of the digital economy on per capita CO2 emissions across 286 Chinese cities (2000-2023). The results show that digital economic growth significantly reduces per capita CO2 emissions, validated through instrumental variables, subsample regressions, and a time-varying DID model anchored in China's Broadband Policy. Mechanistically, digitalization lowers per capita CO2 emissions by enhancing urban population density and green innovation. Heterogeneity analysis reveals stronger per capita CO2 emission reductions in large cities, which are amplified by industrial upgrading but potentially weakened by the expansion of transportation infrastructure. The study recommends advancing ICT integration, leveraging urban innovation spillovers for smaller cities' low-carbon transitions, and aligning smart transportation with industrial policies to meet the Dual Carbon objectives, offering developing nations practical frameworks for digital-green transformation.