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Copyright by Xue Gao 2019 Copyright by Xue Gao 2019 The Dissertation Committee for Xue Gao Certifies that this is the approved version of the following Dissertation: Essays on Innovation Policy, Knowledge Networks, and Cost Reductions in Deployment-Related Technologies in the Solar PV Industry Committee: Varun Rai, Supervisor Sheila Olmstead Kenneth Flamm Gregory Nemet Essays on Innovation Policy, Knowledge Networks, and Cost Reductions in Deployment-Related Technologies in the Solar PV Industry by Xue Gao Dissertation Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy The University of Texas at Austin August 2019 Dedicated to my parents, my husband Fei, and our daughter Adeline. Acknowledgements I would like to express the deepest appreciation to my committee chair Dr. Varun Rai, who gave me continuous guidance and unlimited support to help me go through all the difficulties I came across throughout my Ph.D. career. He encouraged me to explore big questions and learn cutting-edge methodologies. He guided me on how to write and publish academic papers. He supported me to present our research in front of experts at academic conferences. More importantly, he always had confidence in me and never doubted my abilities. Under his supervision and support, I gradually built my confidence in being a good researcher and teacher. Without his support, I could not have done what I was able to do. I would also like to extend my sincere gratitude to my committee members, Dr. Sheila Olmstead, Dr. Kenneth Flamm, and Dr. Gregory Nemet, for their valuable advice and unwavering support. It is very fortunate of me to have them as my committee members, who have always been generous with their time, ideas, support, and recommendation letters. I am also grateful to Dr. Joshua Busby, who was always eager to help. He was the most influential person in developing my qualitative skills. I have greatly appreciated his time, support, guidance, and goodwill throughout my job search. I also want to thank Dr. David Eaton for providing me with encouragement and guidance throughout the duration of the title insurance project. I’m extremely grateful to Dr. Victoria Rodriguez. She is a motherly figure for me and helped me go through many difficulties I had during my Ph.D. journey. I would also v like to thank the professors at the LBJ school who have taught and helped me: Dr. Peter Ward, Dr. Bill Spelman, Dr. Chandler Stolp, Dr. Paul von Hippel, and Dr. Carolyn Heinrich. They were always there to provide helpful advice, unparalleled support, and academic resources. Special thanks to outstanding members of the Rai group, Cale Reeves, Ariane Beck, Mark Hand, Erik Funkhouser, Noorah Alhasan, Ashok Sekar, Vivek Shastry, Tiffany Wu, and Sindhu Maiyya. They have been friends, colleagues, and mentors whom I have treasured so much. I have greatly appreciated their professionalism and support as we worked together. The pleasant memories of weekly group lunch and many discussions and chats with them will be hard to forget. I must thank collogues at the LBJ school, Cale Reeves, Francisca Bogolasky, Jodi Rosenstein, Nisha Krishnan, Miha Vindis, Noah Dust, Ilse Oehler, Abby Lane, Santiago Tellez, Christina Caramanis, Jiameng Zheng, Mark Hand, Rachael Singer, Selena Caldera, Ashlyn Webb, Diana Bolsinger, Eun Young Kim, Alfonso Alvarez, Julian Plough, and Regina Buono. Being part of the LBJ school has given me many pleasant memories to cherish. I want to thank them for their kindnesses and unwavering support. Finally, to thank the people who shaped me into the person I am. To my parents, I’m extremely grateful that you’ve always inspired me to pursue my dream, encouraged my ambitions, stood behind me, provided continued support, and guided me in the right direction. I salute you for the selfless love and sacrifice you did for me. You mean the world to me, and I will never be able to thank you enough. To my husband Fei, you were always there for me without a doubt. You provided me with endless love, support, and vi companionship throughout the whole process. I am blessed to have you by my side. To my beloved daughter Adeline, I am forever grateful to have you in my life. Thank you, my sweet girl, for joining us when I started writing the dissertation. Thank you for giving me immense happiness and for motivating me to keep reaching for excellence. vii Abstract Essays on Innovation Policy, Knowledge Networks, and Cost Reductions in Deployment-Related Technologies in the Solar PV Industry Xue Gao, Ph.D. The University of Texas at Austin, 2019 Supervisor: Varun Rai Abstract: Deployment policies have stimulated a large number of renewable energy investment and deployment on a global scale, but they still need to be scaled up at least six times faster to keep global warming below hazardous levels. Therefore, particular emphasis should be placed on understanding the impact of deployment policy on technological innovations and cost reductions, because being more cost-effective and efficient can further facilitate scaling-up. The overarching aim of the dissertation is to understand whether and how deployment policy can lead to technological changes and cost reductions. To be specific, the first essay focuses on whether and how demand-pull policy can impact technological innovation. The second essay explores why deployment policy is essential to promote technological innovations through studying firms’ knowledge acquisition behaviors when conducting innovations. The third essay investigates three primary learning mechanisms through which deployment policy can facilitate cost reductions and contributes to separating these three mechanisms, namely, learning by doing, learning by searching, and learning by interacting. The particular focus of this dissertation is the role of geography. The importance of geography as an element of technological learning and viii innovation continues to be debated by researchers. The salience of this topic is ever greater today, when governments across the world are struggling to balance the opposing pulls of inward-looking, protective approaches to economic growth (e.g., “local jobs” and “preferential procurement”) and outward-looking, collaborative, and open approaches to economic growth (e.g., “open innovation” and “imported talent”). Additionally, this dissertation is related to a broader question, which also sums up my main research topic: what combination of innovation ecosystem features – including, local deployment policies, technology characteristics, social and human capital, demand factors, and supply conditions -- translate into persistent localized innovation and economic benefits. ix Table of Contents List of Tables ................................................................................................................... xiv List of Figures ................................................................................................................. xvii Chapter 1: Introduction .....................................................................................................1 Background .................................................................................................................1 Research objectives .....................................................................................................4 Empirical focus and research questions ......................................................................6 Brief summary of each essay ......................................................................................8 Chapter 2: Relevant literature .........................................................................................13 Technological innovation and innovation policy ......................................................13 Technological learning .............................................................................................20 Why and how geography matters in innovation .......................................................22 Soft costs reductions and technological innovations in solar energy .......................26 Patent data and citation analysis ...............................................................................29 Chapter 3: Local demand-pull policy and energy innovation: Evidence from the solar photovoltaic market in China ..............................................................................33 Introduction ...............................................................................................................33 Background and related literature .............................................................................36 Related literature ...........................................................................................36 Background on distributed PV policies in China ..........................................39 Data and methodology ..............................................................................................42 Data ...............................................................................................................42 Measurement .................................................................................................45 Empirical models ..........................................................................................47 x Omitted variables and potential endogeneity ................................................51 Results .......................................................................................................................51
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