Abstract: Government subsidies are important incentive policy measures to promote green and low-carbon development, economic transformation and the achievement of social sustainability goals. Different from previous literature that mainly focuses on the impact of government subsidies on the overall environmental protection investment of enterprises, this paper based on manually-sorted data on the environmental subsidies and corporate environmental investment of China’s listed companies from 2007 to 2020, classifies two types of corporate environmental investment behaviors from internal and external perspectives: cleaner production (CP) and end-of-pipe treatment (ET), and analyzes the differences in the impacts of environmental subsidies on the two different types of investment behaviors. The results show that government subsidies for CP can alleviate the financing constraints and increase the expected returns of firms’ investment, which in turn can lead to greater investment by firms; government subsidies for ET fail to increase the expected returns of firms’ investment and have a crowding-out effect on the amount of investment made by enterprises themselves. The above findings provide scientific guideline for optimizing the structure of environmental subsidies and for accelerating the transition to cleaner production.

Key words: environmental subsidies, environmental investment options, cleaner production, end-of-pipe treatment