 Water resources tax and corporate R&D strategies: Policy effects on innovation investment and collaboration preferenceDuan Liu, Liyun Peng, Qiuhong Wang, Hong Wan and Nizhou Yu Economic Analysis and Policy, 2025, vol. 85, issue C, 2276-2298 Abstract: This study leverages China's Water Resource Tax (WRT) reform as a quasi-natural experiment to empirically examine its impact on corporate R&D investment and mode choice. Using a multi-period difference-in-difference (DID) model, we find that the institutional pressure and support resulting from the WRT reform significantly boost R&D investment in water-sensitive enterprises. Notably, these firms prefer for cooperative R&D over independent R&D, particularly in subsamples characterized by higher R&D risk, lower R&D capacity, and greater prior experience with collaboration. We also explore the heterogeneity of the reform's effect in terms of corporate characteristics and external environmental factors. Our findings contribute to the literature on the economic outcomes of environmental taxation policies, offering strategic insights for firms’ R&D decisions and providing guidance for optimizing green tax systems to support sustainable development. Keywords: Water resources tax reform; R&D investment; Independent R&D; Cooperative R&D (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:2276-2298 DOI: 10.1016/j.eap.2025.03.009 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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