Free trade and environmental standards in the solar panel industry

Using the hedonistic pricing method, the paper investigates the hypothesis that buyers only partially factor in differences in quality or standards in the international marketplace for wafers. The present results are only preliminary and based on a biased sub-sample of the full dataset. Preliminary results support the proposition that standards when proxied by product warranties are only partially factored into the price-quality relationship. Using the instrumental variable and system of equation approaches with the hedonistic pricing method render support for the hypotheiss and that choice in this industry is anchored in a country-of-origin effect which could owe to differences local producer and consumer cultures. Accounting for the country-of-origin effect a one year increase in product warranty leads to a price increase of around 15-25%.