Demanding Innovation: The Impact of Consumer Subsidies on Solar Panel Production Costs.
Private sector innovation is critical to mitigating and adapting to climate change. This paper studies innovation in solar energy technology, a key source of clean energy that has experienced rapid price declines over the past decade. To understand the causes and effects of innovation, I estimate a dynamic structural model of competition among solar panel manufacturers. The model captures important features of the industry, including the role of government subsidies for solar adoption, and I employ a unique measure of technological progress that is observable and verifiable. The results produce two main insights. First, ignoring innovation by firms can generate biased estimates of the effects of government policy. Second, decentralized government intervention in a global market generates spillovers: a subsidy in one country causes international firms to innovate more, leading to lower prices and increased adoption elsewhere. This spillover underscores the need for international coordination by governments and the private sector to address climate change.
Date: 18 January 2022, 16:00 (Tuesday, 1st week, Hilary 2022)
Venue: Join Zoom Meeting
Speaker: Todd Gerarden (Cornell University)
Organising department: Department of Economics
Part of: Oxford Environmental Economics Seminar Series
Booking required?: Not required
Audience: Members of the University only
Editor: Emma Heritage