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Antidumping and Feed-In Tariffs as Good Buddies? Modeling the EU-China Solar Panel Dispute

Abstract:
The paper analyzes the interactions between trade and renewable energy policies based on the EU-China solar panel dispute which is the most significant antidumping (AD) complaint in Europe. We build a price competition duopoly model with differentiated products and intra-industry trade in photovoltaic (PV) equipment. We show that an optimal antidumping duty always increases with the feed-in tariff (FIT) program set in the home country. An appropriate antidumping duty - nullifying the dumping margin - decreases with the FIT program. We show that optimal FIT increases with the AD duty. Therefore, trade and renewable energy optimal policies may complement one another. Lastly, we introduce R&D activities in the PV sector, and international spillovers. We show that R&D makes the optimal FIT lower and increases the dumping margin. These effects are reinforced by technological spillovers.

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Energy Specializations: Renewables – Policy and Regulation; Renewables – Solar

JEL Codes: F18: Trade and Environment, L52: Industrial Policy; Sectoral Planning Methods, Q42: Alternative Energy Sources, Q48: Energy: Government Policy, Q54: Climate; Natural Disasters and Their Management; Global Warming, :

Keywords: Antidumping, FIT, Solar Panels, Renewable Energy, Trade disputes, EU, China

DOI: 10.5547/01956574.39.6.pbou

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Published in Volume 39, Number 6 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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