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Withdrawing the visible hand: the impact of subsidy withdrawal policy on the total factor productivity of photovoltaic enterprises

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  • Lin, Boqiang
  • Zhang, Aoxiang

Abstract

The photovoltaic (PV) industry plays a critical role in energy transition, with subsidy policies historically serving as a key driver for its development. However, understanding the impact of subsidy withdrawal on PV industry development is essential for optimizing future policies and enhancing industry performance. Using data from Chinese listed enterprises spanning from 2009 to 2023 and employing Lasso, PSM, and DID methods, the study explores the impact of subsidy withdrawal on the total factor productivity (TFP) of PV enterprises. Main findings include: (1) The subsidy withdrawal policy significantly improves the TFP of PV enterprises. (2) The subsidy withdrawal reduces TFP by exacerbating financing constraints, but enhances TFP through increased R&D investment and optimized supply chain efficiency. (3) Market competition exerts a significant moderating effect, with stronger competition amplifying TFP improvements. (4) The policy's positive impact is stronger for non-state-owned enterprises, larger enterprises, and those located in eastern regions. These findings offer valuable implications for policy design and market-oriented reform in the PV industry.

Suggested Citation

  • Lin, Boqiang & Zhang, Aoxiang, 2025. "Withdrawing the visible hand: the impact of subsidy withdrawal policy on the total factor productivity of photovoltaic enterprises," Renewable Energy, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:renene:v:254:y:2025:i:c:s0960148125013151
    DOI: 10.1016/j.renene.2025.123653
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    2. Xie, Bai-Chen & Wu, Qian-Xu & Qin, Yu-Yan & Zhang, Can, 2025. "Performance evaluation of emerging grid infrastructure Operations: Evidence from ultra-high-voltage transmission lines in China," Socio-Economic Planning Sciences, Elsevier, vol. 102(C).
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    4. Xiao, Lina & Yang, Wu, 2025. "From policy-driven to market-driven: Does subsidy phase-out enhance the competitive advantage of the photovoltaic industry?," Energy, Elsevier, vol. 338(C).

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