The effects of domestic and EU incentives on corporate investment toward ecological transition: a propensity score matching approach

Abstract

We investigate the effects of domestic and European Union (EU) incentives on different types of corporate investment in ecological transition in Italian firms including a large representative sample of small companies and the universe of companies above 250 employees. We perform propensity score matching tests exploiting revealed information of firms that declare to use the incentives for specific ecological transition investments compared to a synthetic counterfactual of “twin” companies matched on selected characteristics. Our findings show that domestic and EU incentives significantly increase green investment for both small and medium/large-sized companies, the impact being highest when we consider investment in energy-saving plants and for carbon emission reduction.