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Financial subsidy, government audit and new transportation technology: Evidence from the new energy vehicle pilot city program in China

Author

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  • Li, Xi
  • Wang, Ziyan
  • Jiang, Siming
  • Li, Chongyi
  • Guo, Huanxiu

Abstract

As the global transportation sector grapples with challenges related to the energy crisis and climate change, New Energy Vehicles (NEVs) have emerged as a promising solution. In order to promote this new transportation technology, China has implemented strategic policies, such as the two-round NEV demonstration and pilot city program. Using a novel firm-month level panel data and the Difference-in-Difference (DID) strategy, this paper assesses the impact of the NEV pilot city program on NEV production from 2009 to 2016. Our findings reveal a significant increase in the production of Battery Electric Vehicles (BEVs) by 37.0% and Plug-in Hybrid Electric Vehicles (PHEVs) by 6.7%, primarily driven by financial subsidies in the private sector. The impact of the financial subsidy in both private and public sectors was further enhanced by government audit. Heterogeneous analysis shows the effect of the program was more pronounced in eastern regions, medium and small cities, and key cities for air pollution control. Based on the empirical findings, we discuss policy options for fostering new transportation technology in developing countries.

Suggested Citation

  • Li, Xi & Wang, Ziyan & Jiang, Siming & Li, Chongyi & Guo, Huanxiu, 2024. "Financial subsidy, government audit and new transportation technology: Evidence from the new energy vehicle pilot city program in China," Research in Transportation Economics, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:retrec:v:106:y:2024:i:c:s0739885924000428
    DOI: 10.1016/j.retrec.2024.101447
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    Keywords

    New energy vehicle; Transportation technology; Government audit; Subsidy; China;
    All these keywords.

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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