The Impact of International Trade on the Price of Solar Photovoltaic Modules: Empirical Evidence

Ivan Hajdukovic

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Abstract: This paper provides an empirical examination on the relationship between international trade and the price of solar photovoltaic (PV) modules. Using a sample of 15 countries over the period 2006-2015, we propose a dynamic linear panel data model based on a new specification, including number of relevant factors influencing solar PV module prices. The empirical analysis reveals that an increase in imports of solar PV cells and modules is associated with a decline in solar PV module prices. This finding suggests that international trade could lead to further price reductions, thus fostering the deployment of solar PV technology. The use of renewable energy can in turn have positive effects on environmental quality by reducing the emission of detrimental greenhouse gases generated by the consumption of fossil fuels. The empirical part reveals several other important findings. Market and technological development are key factors explaining the decline in solar PV module prices. Government policies such as public budget for R&D in PV and feed-in tariff for solar PV are effective in reducing the price of solar PV modules. Moreover, an increase in renewable energy consumption has a negative influence on solar PV module prices.

Keywords: Dynamic panel data models; Solar photovoltaic module prices; Trade and Environment; Trade and Environment JEL Classification: C23; F18; Q42; Q56 (search for similar items in EconPapers)
Date: 2022-10-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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Published in EconomiA, 2022, 23 (1), pp.88-104. ⟨10.1108/ECON-05-2022-0007⟩

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Journal Article: The impact of international trade on the price of solar photovoltaic modules: empirical evidence (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02488067

DOI: 10.1108/ECON-05-2022-0007

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