Local demand-pull policy and energy innovation: Evidence from the solar photovoltaic market in China

Xue Gao, Varun Rai

Research output: Contribution to journalArticlepeer-review

21 Scopus citations


Market demand is an important driver for inducing innovation, with many empirical studies supporting the demand-induced innovation hypothesis. Critiques of such studies, however, emphasize that new empirical evidence that can address existing empirical challenges is needed. Furthermore, existing literature disagrees about whether the locus of demand-pull policy matters. In this paper, we use empirical evidence from the distributed solar photovoltaic (PV) market in China to address the following questions: (1) Is there evidence of demand-induced innovation? (2) Does the effect of local demand-pull policy differ from the effect of non-local demand-pull policy on demand-induced innovation? To address these questions, we develop and analyze an original database of PV balance-of-system (BOS) patents in the distributed PV market filed between 2005 and 2014 in China. Our results support the demand-induced innovation hypothesis and suggest that only local demand significantly induces PV BOS innovations in the distributed PV market in China. The different effects of local demand and non-local demand emphasize the importance of local markets and local policies, lending some support to bottom-up approaches to clean energy governance.

Original languageEnglish (US)
Pages (from-to)364-376
Number of pages13
JournalEnergy Policy
StatePublished - May 2019
Externally publishedYes


  • Comparative advantage
  • Demand pull
  • Patents
  • Regional innovation
  • Solar PV

ASJC Scopus subject areas

  • Energy(all)
  • Management, Monitoring, Policy and Law


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