How public demonstration project affects the emergence of a new industry: An empirical study on electric vehicle demonstration project in China

Public demonstration projects are receiving increasing attention, especially when some developing economies attempt to accelerate the emergence of new industries - though being questioned - through government interventions. This paper, therefore, aims to explore whether these demonstration policies can promote industrial emergence, at least in China; and what is the influential mechanism behind? This paper investigates China's demonstration project on electrical vehicle - “Ten Cities Thousand Cars” programme - through a survey with 1500 questionnaires. 437 valid returns have been analyzed by using the structural equation modeling (SEM) method. The result shows that the public demonstration project is effective in terms of information, application, and product diffusion. In addition, the result also validates the model that illustrates how demonstration policies affect industrial innovation via testing and showing functions. This paper helps to better understand how demonstration policies intervene industrial emergence, and it will be of interest to policy makers, industrialists and academics.