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Subsidies and tax incentives - Does it make a difference on TFP? Evidences from China's photovoltaic and wind listed companies

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  • Wu, Wei
  • Hu, Yingying
  • Wu, Qinwen

Abstract

Under potent policy support, China's photovoltaic (PV) and wind power industries have scored remarkable achievements. However, the mechanism of how the policy remains controversial. Based on the data of 62 listed companies from 2007 to 2020, this study constructs fixed-effect models and PSM models to investigate the effect of government subsidies and tax incentives on the technical efficiency of China's PV and wind power companies, as well as the role of R&D investment and operation efficiency. The results indicate that government support policies have a different impact on the companies' technical efficiency. Subsidies have significant inhibitory effects on technical efficiency by squeezing out private R&D investment. Meanwhile, tax incentives boost technical efficiency and operation efficiency recur to a mediating role. Based on these results, some valuable suggestions for improving the government policy mechanism of the photovoltaic and wind power industry are proposed.

Suggested Citation

  • Wu, Wei & Hu, Yingying & Wu, Qinwen, 2023. "Subsidies and tax incentives - Does it make a difference on TFP? Evidences from China's photovoltaic and wind listed companies," Renewable Energy, Elsevier, vol. 208(C), pages 645-656.
    • Handle: RePEc:eee:renene:v:208:y:2023:i:c:p:645-656
    DOI: 10.1016/j.renene.2023.03.080
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    Cited by:

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    2. Lin, Boqiang & Zhang, Aoxiang, 2024. "Impact of government subsidies on total factor productivity of energy storage enterprises under dual-carbon targets," Energy Policy, Elsevier, vol. 187(C).
    3. Lin, Boqiang & Xie, Yongjing, 2024. "The role of venture capital in determining the total factor productivity of renewable energy enterprises: In the context of government subsidy reduction," Energy Economics, Elsevier, vol. 132(C).

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