Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice...
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Transcript of Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice...
![Page 1: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/1.jpg)
Peer Effects in the Diffusion of Solar Photovoltaic Panels
Marketing Science Science-to-Practice Initiative
Bryan Bollinger and Kenneth Gillingham
![Page 2: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/2.jpg)
Motivation: Social Contagion
• A causal peer effect is necessary if marketers wish to
utilize the social spillover effect, in which marketing
activity directed at one person then has a spillover effect
to their peers.
![Page 3: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/3.jpg)
Application - The Diffusion of Solar Photovoltaic Panels (PV)
• Policies to promote adoption of solar photovoltaic (PV)
panels have been gaining momentum throughout the world.
– In the US: 30% solar energy federal investment tax credit.
– In California: $3.3 billion 10 year California Solar Initiative (CSI).
• The nature of the peer effects will determine how to
optimally allocate marketing effort by firms and
policymakers.
![Page 4: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/4.jpg)
Accelerating Empirical Adoption Rate for Solar PV in California
![Page 5: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/5.jpg)
Clustering of Installations
2001-2003 2001-2006
![Page 6: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/6.jpg)
The Method
• Bollinger and Gillingham (2012) estimate causal peer effects
by determining the effects of a difference in the local
installed base of solar panels on the difference in the
adoption rate for different zip codes.
• By using differences, the authors control for both static and
time-varying unobserved factors in the zip code which lead
to different adoption rates (see paper for details).
![Page 7: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/7.jpg)
Findings #1
• Causal peer effects exist in the diffusion of solar panels.
• For the average zip code, an additional installation
increases the probability of an adoption in the zip code
by 0.78 percentage points.
• There is significant heterogeneity in the peer effects
across zip codes which can be partly explained by
demographics.
![Page 8: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/8.jpg)
Findings #2
• The peer effect is slightly
increasing over time.
• This indicates that firms
and policy markers may
be effectively leveraging
them in their marketing
efforts.
![Page 9: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/9.jpg)
Findings #3
• Peer effects in the diffusion of solar panels work even
more efficiently at a smaller geographic scale (the street-
level).
• Using a Bass model to explain diffusion separately for
each zip code does a good job at estimating the peer
effect (the coefficient of imitation) but significantly over-
estimates the market size due to the significant
acceleration of adoption.
![Page 10: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/10.jpg)
Key implications #1
• Once we’ve obtained a better / more precise estimate what
can we do with it?
– Identify “low hanging fruit” (regions where peer effects will work
hard for you to maximize the impact of initial marketing efforts)
– Allocate resources more efficiently
– Design product attributes that are conducive to stimulating peer
effects (for solar, installers will post signs to increase the visibility
of completed installations)
![Page 11: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/11.jpg)
Key implications #2
• For what kinds of products should we expect to
see peer effects?– Experience goods which have low
trialability (see Rogers Five
Factors), increasing the value of
Word-of-Mouth
– Visible products that communicate
the consumer’s values (in this
case, environmental stewardship)
![Page 12: Peer Effects in the Diffusion of Solar Photovoltaic Panels Marketing Science Science-to-Practice Initiative Bryan Bollinger and Kenneth Gillingham.](https://reader036.fdocuments.us/reader036/viewer/2022062620/551a46f9550346a4248b5d2d/html5/thumbnails/12.jpg)
Summary
• Causality of peer effects is important in allocating
marketing resources.
• Estimating causality is a challenge.
• Causal peer effects can be identified with rich enough data
on the timing of adoption (Ideally, experiments could be
used to identify and measure causal peer effects.)
• Peer effects can be effectively utilized in marketing efforts.