Article Dans Une Revue Energy Economics Année : 2023

Green innovation downturn: the role of imperfect competition

Résumé

We use strategic interactions to analyze the role of China’s state-subsidized production expansion in the recent downturn in solar photovoltaics innovation. To that end, we develop a dynamic game model in which solar panel manufacturers compete in price and invest in cost-reducing research. The resulting Nash equilibrium displays an inverted U relationship between a manufacturer’s market share and its research effort. In the case where a local firm is competing against a foreign state-subsidized one, we obtain analytical and numerical results that are consistent with three stylized facts: (i) the foreign manufacturer progressively expands to become the dominant player, (ii) competition and innovation bring marginal costs down to zero, and (iii) each manufacturer’s research effort follows an increasing-then-decreasing curve. At a policy level, our model shows that national technology-push policies, such as R&D subsidies, can affect foreign innovation by changing the structure of global competition.

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hal-04317679 , version 1 (09-07-2025)

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René Aïd, Mohamed Bahlali, Anna Creti. Green innovation downturn: the role of imperfect competition. Energy Economics, 2023, 123, ⟨10.1016/j.eneco.2023.106754⟩. ⟨hal-04317679⟩
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