The impact of market-incentive environmental regulation on the development of the new energy vehicle industry: a quasi-natural experiment based on China's dual-credit policy.

Promoting new energy vehicles (NEVs) is considered to be one of the most effective ways to solve the increasingly serious problems of energy security and environmental pollution. Under the background of a gradual decline in the use of subsidy policy, the dual-credit policy (DCP), as a market-incentive environmental regulation, has been introduced to the process of policy development. This is of great significance in promoting NEVs and upgrading of the automobile industry. Based on data for 56 listed companies related to NEVs from 2012 to 2019, this study investigated the impact of the DCP on total factor productivity (TFP) under the framework of the propensity score matching difference-in-differences (PSM-DID) and further analyzed the mechanisms by how the DCP impacted on TFP. In addition, the heterogenous impacts of different firms were investigated. The results reveal three key findings. (1) After using instrumental variable to overcome endogenous problems and carrying out a series of robustness tests, the DCP can significantly improve firms' TFP, and this effect is increasing annually. (2) The results of the mechanism analysis show that technological innovation, reputation enhancements, and the reduction of manager motivation have promotional effects on firms' TFP. Besides, environmental tax can reduce the contribution of research and development (R&D) innovation to TFP. (3) In terms of regional and market structural levels, the promotional effect of the DCP on firms' TFP in the eastern region is greater than that in the midwestern region. Furthermore, it has no significant effect on competitive firms, but plays a significant role in the improvement of oligopolistic firms' TFP. This study supported the Porter Hypothesis that flexible market-incentive environmental regulation is likely to trigger positive productivity effects, and provided an empirical basis and latest information for promoting the accuracy and effectiveness of the DCP implementation.