Local Subsidies, Local Protectionism and Market Concentration in China’s New Energy Vehicle Industry

Jiawen Fu () and Chen Wang ()
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Jiawen Fu: Huazhong University of Science and Technology, School of Economics
Chen Wang: Central University of Finance and Economics, School of Accounting

A chapter in Proceedings of 2024 4th International Conference on Public Management and Big Data Analysis (PMBDA 2024), 2025, pp 231-239 from Springer

Abstract: Abstract Local subsidies are financial incentives offered by local governments to promote new energy vehicle (NEV) adoption within their jurisdictions. In this study, we collect data from 270 Chinese cities between 2016 and 2019, and construct a two-way fixed-effect model to explore the impact of local subsidies on the market concentration ratio of China’s NEV industry. We find that local subsidies significantly increase the market concentration ratio of China’s NEV industry, with every 10,000 yuan increase in the subsidy standard leading to an 8% increase in the market concentration of the city’s NEV market. Through a mechanism analysis, we further find that it is local protectionism embodied in local subsidy policies that leads to market concentration, while local subsidies per se do not affect market structure. These results have important implications for formulating and improving policies for the NEV industry.

Keywords: New energy vehicle; Local subsidy; Local protectionism; Market concentration (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-656-7_23

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DOI: 10.2991/978-94-6463-656-7_23

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