REPEC ranking of top 25% of authors in Canada
In Progress
- Industrial policies for multi-stage production: The battle for battery-powered vehicles, with Thierry Mayer, Marc Melitz, and Chenying Yang
- Abstract: Many countries have set ambitious targets for transitioning away from fossil fuels. The plans generally involve switching from combustion engines to electric vehicles (EVs). As batteries constitute around 40% of the cost of EVs, firms need to establish low-cost battery supply chains in order to make EVs attractive to consumers. At the same time, governments increasingly use tax and subsidy schemes to induce firms to locate more stages of the supply chain within their jurisdictions. We specify a multi-stage supply chain for EVs from battery cell production to vehicle distribution. Each car producer selects where to open facilities at each stage considering production costs, transport costs, tariffs and subsidies. This is a difficult combinatorial choice problem, but we leverage a mixed integer linear program formulation which can be solved in under a minute for a single firm.
We estimate the parameters of our model–which include the variable production costs and fixed plant/model activation costs–using observed sourcing decisions for all production stages over the period 2015 to 2022.
The next step is a set of counterfactuals that compute how policy interventions affect the final pattern of production and trade in this sector. Ultimately, we plan to use the model to quantify the impact of competing industrial policies on global CO2 emissions. - Skewed and Extreme: Useful distributions for economic heterogeneity (There are many useful results collected here but please verify each result before relying upon it in your work. Let me know if you find any mistakes or think of things that should be added.)