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The Impact of Purchase Subsidy on Enterprises’ R&D Efforts: Evidence from China’s New Energy Vehicle Industry

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  • Cailou Jiang

    (Development Institute of Jiangbei New Area, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Ying Zhang

    (Development Institute of Jiangbei New Area, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Qun Zhao

    (Research Institute for Environment and Health, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Chong Wu

    (Development Institute of Jiangbei New Area, Nanjing University of Information Science & Technology, Nanjing 210044, China)

Abstract

Purchase subsidy has been adopted to accelerate the diffusion of New Energy Vehicles (NEVs) in China. With a Multi-stage Difference-in-Differences (DID) method, this research investigates the impact of purchase subsidy on Research and Development (R&D) efforts of NEV enterprises. The results indicate that purchase subsidy for NEVs has a positive and significant impact on R&D efforts of NEV enterprises. The impact increases when the purchase subsidy rate decreases. When considering the influences of government procurement and exemption on purchase tax, the positive impact of purchase subsidy still remains significant. The policy implications are that the purchase subsidy rate should be reduced, and stricter technological requirements should be set to couple with the purchase subsidy.

Suggested Citation

  • Cailou Jiang & Ying Zhang & Qun Zhao & Chong Wu, 2020. "The Impact of Purchase Subsidy on Enterprises’ R&D Efforts: Evidence from China’s New Energy Vehicle Industry," Sustainability, MDPI, vol. 12(3), pages 1-10, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:3:p:1105-:d:316286
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