Energy Market Liberalization and Renewable Energy Policies in OECD Countries
IEB Working Paper N. 2014/18
55 Pages Posted: 24 Jul 2014
Date Written: April 11, 2014
We investigate the effect of energy liberalizations on policies that support renewable energy in a long panel of OECD countries. We estimate this effect accounting for the endogeneity of liberalization related to joint decisions within a country’s energy strategy. Using regulation in other industries as instruments, we find that energy liberalization increases the public support to renewable energy. The effect of liberalization is the second largest after the effect of per-capita income and is fully driven by reductions in entry barriers, while the effect of privatization is negative. Finally, our results are robust to dynamic specifications and various policy indicators.
Keywords: renewable energy policy, energy market liberalization, instrumental variables, applied political economy
JEL Classification: Q42, Q48, D72, O38
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