on the price dynamics of boiled sand
Wow. Tim Worstall drops some serious knowledge on us this morning about the dynamics of market pricing for silicon chips and the reasons why Solyndra and many Chinese solar firms failed or are failing.
Not sure that I agree with his overall point that we don't care about producers when evaluating the effects of trade, but I learned a lot about boiled sand and the production of solar panels.
Here's an excerpt (but do read the whole thing):
At which point I should make the metal’s industry critique of the Solyndra business plan. They assumed a continuing high price for silicon and thus their technology concentrated on making that expensive material more productive. If silicon had remained high priced it might even have worked: but as they were ramping up production into a world where the raw silicon ingot had just fallen to 10% of its previous price they were doomed.