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A Model of Competition in the Solar Panel Industry

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  • Pillai, Unni
  • McLaughlin, Jamison

Abstract

We develop a model of competition in the solar panel industry. Solar firms manufacture panels that are differentiated both vertically and horizontally, and compete by setting quantities. The equilibrium of the model is consistent with a set of stylized facts that we document, including variation in prices, markups and market shares across firms. We calibrate the model using a new dataset data on prices, costs and shipments of leading solar companies, as well as solar sales in four leading markets. The calibrated model is applied to evaluate the impact of a decline in the price of polysilicon, a key raw material used in the manufacture of solar panels, on the equilibrium price of solar panels.

Suggested Citation

  • Pillai, Unni & McLaughlin, Jamison, 2013. "A Model of Competition in the Solar Panel Industry," MPRA Paper 46655, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46655
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    References listed on IDEAS

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    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Andrew Atkeson & Ariel Burstein, 2008. "Pricing-to-Market, Trade Costs, and International Relative Prices," American Economic Review, American Economic Association, vol. 98(5), pages 1998-2031, December.
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    5. Peng, Songlan & van der Laan Smith, Joyce, 2010. "Chinese GAAP and IFRS: An analysis of the convergence process," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 19(1), pages 16-34.
    6. Yu, Yang & Song, Yuhua & Bao, Haibo, 2012. "Why did the price of solar PV Si feedstock fluctuate so wildly in 2004–2009?," Energy Policy, Elsevier, vol. 49(C), pages 572-585.
    7. Nemet, Gregory F., 2006. "Beyond the learning curve: factors influencing cost reductions in photovoltaics," Energy Policy, Elsevier, vol. 34(17), pages 3218-3232, November.
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    Cited by:

    1. Bougette, Patrice & Charlier, Christophe, 2015. "Renewable energy, subsidies, and the WTO: Where has the ‘green’ gone?," Energy Economics, Elsevier, vol. 51(C), pages 407-416.
    2. Stefan J. Reichelstein & Anshuman Sahoo, 2015. "Cost- and Price Dynamics of Solar PV Modules," CESifo Working Paper Series 5674, CESifo.
    3. Aïd, René & Bahlali, Mohamed & Creti, Anna, 2023. "Green innovation downturn: The role of imperfect competition," Energy Economics, Elsevier, vol. 123(C).
    4. Fischer, Carolyn, 2016. "Strategic Subsidies for Green Goods," RFF Working Paper Series dp-16-12, Resources for the Future.
    5. Myojo, Satoshi & Ohashi, Hiroshi, 2018. "Effects of consumer subsidies for renewable energy on industry growth and social welfare: The case of solar photovoltaic systems in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 48(C), pages 55-67.
    6. Huang, Jiashun & Li, Weiping & Guo, Lijia & Hu, Xi & Hall, Jim W., 2020. "Renewable energy and household economy in rural China," Renewable Energy, Elsevier, vol. 155(C), pages 669-676.
    7. Kavlak, Goksin & McNerney, James & Trancik, Jessika E., 2018. "Evaluating the causes of cost reduction in photovoltaic modules," Energy Policy, Elsevier, vol. 123(C), pages 700-710.
    8. Dimitrios Zormpas, 2021. "Jointly Held Investment Options and Vertical Relationships," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(4), pages 513-530, June.

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    More about this item

    Keywords

    Solar; Photovoltaics; Competition; Polysilicon;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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