Electricity price cross-subsidies and enterprises’ green total factor productivity: Empirical evidence from Chinese industrial listed enterprises

Li Xie and Zhisheng Huang

Journal of Asian Economics, 2025, vol. 96, issue C

Abstract: As a kind of electricity price distortion, the effect of electricity price cross-subsidies has always been controversial. From the perspective of the green development effect generated by electricity price cross-subsidies, we estimate the electricity price cross-subsidies in different regions of China using Ramsey’s optimal pricing as a yardstick, and measure the green total factor productivity(GTFP) of enterprises using the SBM-DDF model with the samples of industrial listed enterprises from 2006 to 2020, and then empirically analyze the mechanism of the electricity price cross-subsidies affecting enterprises’ GTFP. The results show that electricity price cross-subsidies affect enterprises’ GTFP through two channels, improving resource allocation efficiency and inhibiting technological progress. However, the effect of electricity price cross-subsidies on improving resource allocation efficiency is more significant than its inhibitory effect on technological advancement, which ultimately enhances the enterprises’ GTFP. At the same time, the impact of electricity price cross-subsidies on enterprises’ GTFP varies significantly across enterprises with different ownership structures, different scales, different energy consumption, and located in different regions, as well as before and after the second round of China’s electricity system reform in 2015. This study provides empirical inspiration for developing countries to steadily advance the reform of electricity price cross-subsidies policies and accelerate the green transformation of economic development mode.

Keywords: Electricity price cross-subsidies; Green total factor productivity; SBM-DDF model; Industrial sector; Listed enterprises (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:96:y:2025:i:c:s104900782400143x

DOI: 10.1016/j.asieco.2024.101848

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