VAT Incentives, Industrial-Chain Spillovers, and Resource Allocation: Evidence from China’s New Energy Industry

Value-added tax (VAT) incentives substantially contribute to improving resource allocation efficiency in the new energy industry, with the industrial chain serving as a key transmission channel. Exploiting the staggered rollout of sales-side VAT incentives as a quasi-natural experiment, we apply a double machine learning (DML) approach to estimate their impact on resource allocation efficiency of upstream new energy manufacturing firms. The empirical results show that downstream sales-side VAT incentives significantly enhance resource allocation efficiency among upstream new energy manufacturers. Mechanism analyses further suggest that this efficiency-improving effect is transmitted upstream primarily through intensified market competition and increased research and development (R&D) activity. Heterogeneity analyses indicate that the spillover effects of VAT incentives on resource allocation are more pronounced among upstream new energy firms that are state-owned, large in scale, incumbent, R&D-intensive, and located in regions with relatively abundant natural resource endowments.