Subsidy policies and operational strategies for multiple competing photovoltaic supply chains

In the past decade, subsidy policies aimed at demand-side of photovoltaic (PV) supply chains have created a dilemma. While they foster the growth of the PV industry, they also induce overcapacity problems to the society. As a result, many governments have cut back subsidies to PV system users. These subsidy reductions hurt PV enterprises and their supply chains that are now facing lost business. To rescue enterprises, but not the market, an appropriate supply-side oriented subsidy policy is urgently needed. It is also important that different stakeholders on a PV supply chain develop closer collaborations to enhance their competitiveness against their rival PV supply chains. In this paper, we use game-theoretical models to investigate the impact of this new approach to policy design within the PV industry. Our findings suggest that the government should properly control the PV market entry, implement a balanced subsidy program and encourage a healthy competition among multiple PV supply chains to balance the operational performance of PV supply chains and the effects of government subsidy on the improvement of market out and social welfare. Under such a governance and subsidy program, a moderate combination of operational strategies will be the robust strategic response for multiple PV supply chains in a competitive environment.