Are Solar Panels Commodities? Evidence of Quality Differences and Asymmetric Information
Journal article, Peer reviewed
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Original versionEuropean Journal of Operational Research. 2019, 280 (1), 365-382. 10.1016/j.ejor.2019.07.001
Solar panels should not be considered commodities. Considerable quality differences, as measured directly by degradation of production over time, are found between manufacturers. I test two implications from the theory of asymmetric information of quality and find: (1) Solar power systems with high-information third-party owners display higher quality than host-owned systems. (2) Furthermore, with a 85% probability, the price of solar panels that are owned by high-information owners are more highly correlated to quality. Methodologically, the article demonstrates a novel application of Bayesian hierarchical regression models that are increasingly popular in operations research and the decision sciences.