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Are solar panels commodities? A Bayesian hierarchical approach to detecting quality differences and asymmetric information

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  • Mauritzen, Johannes

Abstract

Solar panels should not be considered commodities. Considerable quality differences, as measured directly by degradation of production over time, are found between manufacturers. I test two implications from the theory of asymmetric information of quality and find: (1) Solar power systems with high-information third-party owners display higher quality than host-owned systems. (2) Furthermore, with a 85% probability, the price of solar panels that are owned by high-information owners are more highly correlated to quality. Methodologically, the article demonstrates a novel application of Bayesian hierarchical regression models that are increasingly popular in operations research and the decision sciences.

Suggested Citation

  • Mauritzen, Johannes, 2020. "Are solar panels commodities? A Bayesian hierarchical approach to detecting quality differences and asymmetric information," European Journal of Operational Research, Elsevier, vol. 280(1), pages 365-382.
    • Handle: RePEc:eee:ejores:v:280:y:2020:i:1:p:365-382
    DOI: 10.1016/j.ejor.2019.07.001
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    Cited by:

    1. Sommerfeldt, Nelson & Lemoine, Ida & Madani, Hatef, 2022. "Hide and seek: The supply and demand of information for household solar photovoltaic investment," Energy Policy, Elsevier, vol. 161(C).
    2. Magni, Carlo Alberto & Marchioni, Andrea & Baschieri, Davide, 2022. "Impact of financing and payout policy on the economic profitability of solar photovoltaic plants," International Journal of Production Economics, Elsevier, vol. 244(C).

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