Impact of regulatory intervention on green technology and innovation investment of the NEV automaker

Abstract

In response to the government’s call for sustainable development, many manufacturers invest in green technologies to reduce emissions in the production process. However, many energy-using products, such as electric vehicles, would also generate an environmental impact in the use stage. Meanwhile, previous studies on regulatory intervention only investigate how to limit emissions in the production process ignoring environmental benefits in the use process. Driven by these problems, this paper studies the new energy vehicle (NEV) automaker’s green technology investment to reduce emissions in the manufacturing process and green innovation investment in reducing environmental impacts in the use stage. Moreover, this paper also analyzes the impact of regulatory intervention on green investment. Our results show, firstly, only when the direct subsidy to the consumer is small, green innovation subsidy is superior to product subsidy in increasing innovation investment. Moreover, when the emission-reducing subsidy rate is large, the emission-reducing subsidy is superior to cap-and-trade regulation in terms of increasing green technology investment. Secondly, when the subsidy to the NEV automaker is in the middle, the green innovation subsidy can reach an equilibrium from the perspectives of economic benefit, consumer surplus, environmental benefit, and social welfare. Thirdly, from the perspective of environmental benefit, emission-reduction subsidy is always better than cap-and-trade, while from the perspectives of economic benefit and social welfare, cap-and-trade is the best choice in most cases.