Government subsidies and firm-level renewable energy investment: New evidence from partially linear functional-coefficient models

Understanding the heterogeneity and influencing factors of renewable energy investment between enterprises can help to evaluate existing policies and provide guidance for future subsidy policies. This paper investigates how the relationship between government subsidies and renewable energy investment depends on enterprise size and relaxes the linear relationship in the traditional empirical model. Based on firm-level panel data from China, only when the enterprise size exceeds a certain threshold value can it have a significant effect. The effect of government subsidies on renewable energy investment is on the rise. However, its speed tends to decrease with the growth of enterprise size. Besides, ownership concentration and enterprise growth significantly promote investment in renewable energy. The empirical results show that the effect of government subsidies has a significant enhancement in 2016, which may be due to high frequency and high government subsidies in the early stage. These findings are robustly verified. Finally, some specific policy suggestions are put forward.

Automated summary

The study highlights the impact of enterprise size on the relationship between government subsidies and renewable energy investment. Government subsidies have a gradually increasing effect on renewable energy investment, but the speed of impact decreases with the growth of enterprise size. Additionally, ownership concentration and enterprise growth contribute to promoting investment in renewable energy.