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 implemented policies to promote transition from combustion engines to electric vehicles (EVs). As batteries constitute about one third 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 place 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, trade costs, and subsidies. This is a difficult combinatorial choice problem that cannot be solved using existing “squeezing”algorithms that have been used in the recent literature analyzing global supply chain location choices. Instead, we use a mixed integer linear program formulation that drastically reduces computation times.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 2021 to 2023. We then investigate counterfactual simulations for different types of industrial and trade policies and describe how those affect the production location choices across the global chains for EVs and the trade patterns from battery through assembly to final consumption destinations.
- 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.)