Two-Part Tariff Policy and Total Factor Productivity of Pumped Storage Industry: Stimulation or Failure?

Abstract

The two-part tariff (TPT) policy is implemented as an important initiative to accelerate the marketization of the pumped storage industry and promote its high-quality development. However, it is not clear exactly how the TPT policy affects the productivity of the pumped storage industry. Using the EBM-GML method and the DID model, this paper measures the total factor productivity of the pumped storage industry and explores the impact of the Two-Part Tariff (TPT) policy on its total factor productivity. Based on the samples of 16 provinces in China from 2004 to 2020, we find the following: (1) At present, the total factor productivity of China’s pumped storage industry is still at a low level. (2) TPT policy can promote the improvement of total factor productivity, which was strongly supported by the robustness test. Innovation incentive is one of the main mechanisms. (3) The impact of TPT policy on total factor productivity has obvious regional heterogeneity. By geographic location, the TPT policy has little effect on the pumped storage industry’s TFP in the eastern region, but it exerts a significant positive role in the central region. By energy affluence, TPT policy effect is stronger in provinces with low energy dependence. By environmental governance, the role of this policy is more obvious in provinces with low environmental regulation but developed green financial market. Finally, some corresponding policy implications have been put forward.

Keywords

• Two-Part Tariff policy
• total factor productivity
• pumped storage industry
• EBM-GML
• DID