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Exploiting China’s high-speed rail (HSR) as a quasi-natural experiment, we examine the relationship between the HSR connection and green innovation. The opening of HSR can promote green innovation by facilitating the flow of innovation factors. Using the multiperiod difference-in-differences (DID) model, we find that the regional green innovation performance significantly becomes better following the opening of HSR in the local city. Moreover, in examining the specific mechanisms at work, we find evidence that HSR stimulates green patents through increased labor mobility and research capital mobility. Further analyses show that the facilitating effect of HSR is heterogeneous among cities. Our paper sheds new light on the effects of HSR on social welfare in the case of sustainable economy.

Based on the analysis of the high-speed rail industry chain, first, this paper divides the high-speed rail industry chain into infrastructure construction market and manufacturing market of mobile equipment and, second, this paper uses the empirical method of new experience industry organization to measure the market power premium of the high-speed rail upstream market. The study shows that the market power premium of the high-speed rail upstream market is 0.551, and the scale elasticity is 0.314, indicating that there is no systematic market power in the high-speed rail upstream market and there is significant scale diseconomy. The vertical market structure where “private enterprises dominate the upstream competition market and state-owned enterprises dominate the downstream oligopoly market” is further established. Based on the perspective of enterprises’ entry in upstream markets, the social welfare of the high-speed rail industry market structure is analyzed. It is found in the study that the upstream market of the high-speed rail industry has a tendency of insufficient enterprise entry, and the total social welfare increases with the increase in the number of upstream enterprises entry. What is more, the profit of enterprises in the upstream market of high-speed rail decreases with the increase in the number of enterprises in the upstream. This paper believes that policies such as stimulating upstream high-speed rail enterprises entry, providing subsidies to upstream enterprises, reducing upstream enterprises’ entry barriers, and expanding international markets can effectively improve the overall social welfare of the high-speed railway industry.