Learning by Doing and Product Differentiation in the Solar Panel Installation Industry

Ruben Lobel, Assistant Professor of Operations and Information Management

Abstract: Public incentives for innovation in green technologies have appeared both on the supply side (grants for basic research or industry subsidies) and on the demand side (consumer rebates). There are plenty of examples of such governmental programs among renewable energy, electric vehicles, and energy efficiency technologies. The stagnation of installation prices for solar photovoltaic technology has cast some doubt on the efficacy of consumer rebates to promote learning and innovation. We hope to show that learning is indeed happening, but a larger profit margin is charged by the firms that learn. This study hopes to further quantify the effect of competition on preventing firms from extracting the economic surplus from these subsidy programs.