Quality Competition Versus Price Competition: Why Does China Dominate the Global Solar Photo-Voltaic Market?

Lili Wang, Rui Zhuang, Shunwu Huang and Yong Zhao

Emerging Markets Finance and Trade, 2019, vol. 55, issue 6, 1326-1342

Abstract: Using highly disaggregated firm-level data that cover 2,006 firms and 140 destinations over the period 2000–2013, this article empirically investigates the export pricing decisions and the competition patterns of China’s solar photo-voltaic (PV) firms when there is selection into exporting. We find that ignoring the market-selection issue could lead to severe estimation bias if selection into exporting is correlated with pricing behavior. After controlling for selection bias, the results reveal that country characteristics and firm heterogeneity are important not only in explaining the vast differences in export prices but also in affecting how exporters compete in the global market. More productive firms and firms exporting to larger markets tend to compete in quality, whereas firms with better financial conditions are more likely to engage in price competition.

Date: 2019
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DOI: 10.1080/1540496X.2018.1507905

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