Subsidies for renewable energies in the presence of learning effects and market power

Arbeitspapier

We study the impact of learning by doing, learning spill-overs, and imperfect competition in a model with two types of electricity producers, an oligopolistic sector of polluting fossil-fuel utilities and a competitive fringe of non-polluting generators of electricity from renewable energy sources (RES-E). Furthermore we consider an upstream industry of RES-E equipment producers engaged in learning by doing. We show that a first-best policy requires two instruments, a tax in the fossil-fuel sector and an output subsidy for RES-E equipment producers. We then study second-best-optimal feed-in tariffs that are paid to the generators of RES-E. By means of simulations we calculate the welfare loss of a second-best-optimal feed-in-tariff policy and analyze how market structure impacts on second-best-optimal feed-in tariffs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1689

Classification and Topics

• Classification: Wirtschaft ; Alternative Energy Sources ; Oligopoly and Other Imperfect Markets ; Technological Change: Government Policy
• Subject: Feed-in tariffs ; environmental subsidies ; learning by doing ; spill-overs ; market structure ; Förderung regenerativer Energien ; Stromtarif ; Administrierter Preis ; Second Best ; Ökosteuer ; Steuerwirkung ; Energietechnik ; Regenerative Energie ; Lernprozess ; Marktstruktur ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Reichenbach, Johanna ; Requate, Till
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/45880
• Last update: 10.03.2025, 11:42 AM CET