Subsidy rates, absolute pricing, and applied energy efficiency: evidence from energy-efficient appliance subsidies

Tiered subsidies are widely employed in government programs globally, yet a key assumption in the energy efficiency domain, namely that a higher subsidy rate generates a correspondingly stronger market uptake, has received limited empirical scrutiny using high-frequency micro-level data. This paper exploits China's 2024 Energy-Efficient Appliance Subsidy policy as a quasi-natural experiment. Drawing on daily panel data from JD.com covering 12,936 products across eight appliance categories, and using product review counts as a sales proxy, we apply a difference-in-differences approach to assess the policy's effects. The findings are as follows. (1) The subsidy produced a marked aggregate sales increase, with subsidized products registering an approximating 263% gain in average daily unit sales. (2) Grade 2 products, receiving a 15% subsidy, exhibited a significantly larger sales increase than Grade 1 products eligible for 20%, indicating that a higher subsidy rate did not translate into a stronger market response. (3) Two mechanisms account for this mismatch. Consumers appear more responsive to the post-subsidy price level than to the ad valorem rate, with the strongest response concentrated among mid-priced products. The salience of energy efficiency attributes varies substantially across categories, with white goods eliciting the most pronounced response and kitchen appliances the weakest. The findings provide empirical evidence on the heterogeneous transmission of tiered subsidy incentives and offer implications for subsidy design, price-tier targeting, and informational strategies in future energy efficiency programs.