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Heterogeneous Effect of Renewable Energy Policies on Resource Misallocation: Evidence From Chinese Zombie Firms

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  • Jiahui Yi
  • Sheng Dai
  • Jinhua Cheng
  • Yueer Dai

Abstract

Renewable energy policies are recognized as the cornerstone of the low-carbon energy transition. However, they may cause resource misallocation between firms due to information asymmetries and differences in productivity, marginal costs, and revenues. This paper investigates the direct effects of heterogeneous renewable energy policies on resource misallocation and the mediating effects of zombie firms by using the Chinese renewable energy listed firms in the period 1995 to 2020. The empirical results show that the regulation policy not only significantly reduces resource misallocation directly but also indirectly decreases misallocation by inhibiting the formation of zombie firms, whereas economic incentives can significantly result in resource misallocation and exacerbate it by breeding zombie firms. Furthermore, heterogeneous policy effects and the mediating effects of zombie firms are found to be associated with financial dependence, factor intensity, and location. The results have profound policy implications, calling for reasonable regulations, efficient economic incentives, and scientifically targeted policies for renewable energy firms. JEL Classification: C33, C54, O13, Q28, Q48

Suggested Citation

  • Jiahui Yi & Sheng Dai & Jinhua Cheng & Yueer Dai, 2024. "Heterogeneous Effect of Renewable Energy Policies on Resource Misallocation: Evidence From Chinese Zombie Firms," The Energy Journal, , vol. 45(5), pages 33-63, September.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:5:p:33-63
    DOI: 10.1177/01956574241240290
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    Keywords

    economic incentives; regulation; renewable energy policy; resource misallocation; zombie firms;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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