Price subsidies and firm resilience: evidence from the renewable energy power generation industry in China

Abstract Price subsidies are widely adopted measures by countries around the world to promote the development of the renewable energy power generation industry. Existing research mainly analyzes the impact of price subsidy policies on the renewable energy power generation industry from a theoretical perspective and at a macro level, lacking micro-level empirical evidence derived from real-world data. Drawing on data from Chinese-listed power generation firms, this study uses the difference-in-differences model to investigate the impact of the management measures for full guarantee acquisition of renewable energy power generation (MMFGAREPG) on the resilience of China’s renewable energy power generation firms (REPGFs) and the mechanisms involved, providing micro-level evidence for evaluating the long-term effects of price subsidy policies. The findings indicate that the resilience of REPGFs is significantly enhanced following the implementation of MMFGAREPG. The channel test results demonstrate that the implementation of MMFGAREPG increases the financial slack of REPGFs, boosts their innovation efficiency, and attracts more green investors, thereby enhancing their resilience. The heterogeneity test results indicate that the implementation of the MMFGAREPG exerts a more pronounced positive effect on the resilience of REPGFs with better ESG performance, as well as those situated in eastern regions and areas characterized by a well-developed digital economy and green development. This study provides empirical evidence for promoting the sustainable development of the renewable energy power generation industry through market competition mechanisms.