Harnessing the Power of the Sun through Online Platforms: Evidence from the Rooop Solar Market

Buyers in the residential solar photovoltaic (PV) market are o‰en not fully informed about all competitors’ prices when making a purchase decision. Consumers’ lack of complete price information can incentivize sellers to charge higher markups, leading to less adoption. Large markups directly counteract public programs that subsidize solar PV. In this paper, I use proprietary data on consumers’ purchase decisions and sellers’ bids from an online platform to estimate a structural model of supply and demand for solar PV systems. Œe model allows me to estimate buyers’ price elasticities and to infer the size of sellers’ markups. I €rst show that markups make up a substantial portion of solar PV prices. I then use the estimated model to simulate changes in prices and solar panel adoption rates if consumers did not have access to the platform. I €nd that access to the platform increases solar panel adoption by 104%. Œere are two primary drivers of this result: 1) the market becomes more competitive which drives down quoted prices and, 2) reducing search costs connects buyers to higher quality sellers. I €nd that the improvement in competition alone would increase adoption by 30% and the improved access to high-quality sellers alone would increase adoption by 74%. JEL Codes: D22, D44, L11, L15, Q40, Q58