The Threshold effect of fiscal and financial Policies on Technological Innovation of Wind Power Industry

Previous studies focused on the relationship between fiscal policy and technological innovation from a linear perspective, and revealed that the government subsidies have an influence. However, few studies research on the relationship between financial policy and technology innovation, and investigate whether there is a nonlinear relationship between the policy and technological innovation. We also have limited knowledge about the impacting factors. These represent the focuses of this study. Based on the entropy weight method and game theory modeling, this paper concludes: (1) there is a threshold effect among fiscal policy, financial policy and technology innovation of wind power industry, and there is an optimal interval. Only the government subsidy or the amount of bank credit in a certain range can the innovation of the wind power industry to be promoted to a maximum extent. (2) When fiscal policy and financial policy are combined, the effect on technological innovation is higher, and meanwhile the effect of fiscal policy on technological innovation is greater than that of financial policy. (3) The intensity of policy also has an impact and there are threshold characteristics, which means only when the policy intensity break through a certain critical value will the policy be truly effective. (4) Only when the scale of the enterprise and the performance of the enterprise are within a certain range, the implementation effect of the policy is optimal. Meanwhile, there is no threshold effect of the solvency of enterprises, but the solvency of enterprises is negatively related to the effect of fiscal policy. The worse the solvency of enterprises, the worse the policy effect. Theoretically, this study completes current research by introducing financial policy into the relationship between the relationship of fiscal policy and technological innovation and considering their complementary effect. Meanwhile, non-linear relationships, as well as the state- and enterprise level impacting factors of policy implementation are further explored. Practically, results of this study point out the factors that the policy-makers should pay attention to in order to promote innovation, such as the policy intensity, enterprise scale and performance.