Subsidies for learning in renewable energy technologies under market power and emission trading

Arbeitspapier

Under perfect competition on the output market, first best technology subsidies in the presence of learning by doing are justified by knowledge spill overs that are not accounted for by individual companies. First best output subsidies are thus depending directly on the learning effects and are, if applicable, positive. Considering electricity markets, a setting of imperfect competition is more appropriate. We show that the second best output subsidy for learning by doing in renewable energies takes the market distortion due to imperfect competition into account and is of ambiguous sign. Based on simulations with a European electricity market model, we find that second best renewable energy subsidies are positive and only insignificantly impacted by market power. By contrast, the welfare gains from an optimal subsidy are considerably higher compared to a hypothetical situation of perfect competition.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1126

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Electric Utilities ; Technological Change: Choices and Consequences; Diffusion Processes ; Alternative Energy Sources
• Subject: energy policy ; renewable energy ; learning by doing ; imperfect competition ; emission trading ; Regenerative Energie ; Lernprozess ; Elektrizitätswirtschaft ; Förderung regenerativer Energien ; Subvention ; Unvollkommener Wettbewerb ; Emissionshandel ; Theorie ; Europa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Traber, Thure ; Kemfert, Claudia
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/55297
• Last update: 10.03.2025, 11:42 AM CET