Adapting to competition: solar PV innovation in Europe and the impact of the 'China shock'

Andres, Pia ORCID: 0000-0001-9061-7538 (2024) Adapting to competition: solar PV innovation in Europe and the impact of the 'China shock'. Environmental and Resource Economics, 87 (12). 3095 - 3129. ISSN 0924-6460

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Abstract

Low cost solar energy is key to enabling the transition away from fossil fuels. Despite this, the European Union followed the United States’ example in imposing anti-dumping tariffs on solar panel imports from China in 2013, arguing that Chinese panels were unfairly subsidised and harmed its domestic industry. This paper examines the effects of Chinese import competition on firm-level innovation in solar photovoltaic technology by European firms using a sample of 10,137 firms in 15 EU countries over the period 1999–2020. I show that firms which were exposed to higher import competition innovated more if they had a relatively small existing stock of innovation, but less if their historical knowledge stock fell within the top 10th percentile of firms in the sample. This suggests that newer firms were more able to respond to increased competition by innovating, while firms with a large historical stock of innovation may have been locked into old technological paradigms. As firms with a smaller knowledge stock tended to innovate more overall, trade with China appears to have been beneficial in encouraging innovation among the most innovative firms. However, I also find evidence that import competition increased the probability of exit among firms in the sample.

Item Type:	Article
Additional Information:	© 2024 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor T Technology > TJ Mechanical engineering and machinery
Date Deposited:	28 Aug 2024 12:06
Last Modified:	19 Dec 2024 00:58
URI:	http://eprints.lse.ac.uk/id/eprint/125249

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