International competition and trade conflict in a dual photovoltaic supply chain system

Zhisong Chen and Shong-Iee Ivan Su

Renewable Energy, 2020, vol. 151, issue C, 816-828

Abstract: This study has explored a contemporary trade conflict issue heated up by the trade war between two largest economies in the world. Since the solar industry is a fast developing and critical renewable energy industry sector with many global suppliers competing fiercely in the world market, a dual international competing PV module supply chain system is conceptualized to conduct a game-theoretical modeling study for the exploration. Four modeling scenarios including Free Trade (FT), Trade Protection (TP), Price Discrimination (PD) and Anti-price Discrimination (AD) are investigated. A real world–based dual international competing PV supply chain system is designed for the numerical and sensitivity analyses. Two key findings from the study can be summarized: (1) Price discrimination strategy can create the most total supply chain profits and social welfares for dual international competing supply chains but this strategy will eventually lead to trade protection of the importing country and erode the supply chain profits and social welfares; (2) Trade Protection policy delivers the lowest total social welfares and demands for the dual international competing supply chains. The findings imply that in a dual international competing PV supply chain system, Free Trade policy would be the most appropriate trade policy to take by both governments and supply chains for the development of a sustainable solar energy sector. However, human systems are imperfect. The key finding also echoes the recent turbulence development of the world trade conflict that any unfair trade policy will benefit only the country who exercises the unfair trade policy that eventually leads to escalating trade conflict and brings economic damages to the trading stakeholders. Thus, an even more critical issue to explore is to find ways to resolve trade conflict at the early stage of trade conflict, such as the trade protection stage, before the conflict is worsening to the most serious conflict stage and cause serious economic and political damages to the involved parties and the world. This would be an important and emergent research subject to be explored.

Keywords: Photovoltaic (PV) supply chain; International competition; Trade conflict; Free trade; Price discrimination; Trade protection (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:151:y:2020:i:c:p:816-828

DOI: 10.1016/j.renene.2019.11.085

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