Equity and The Willingness to Pay for Green Electricity: Evidence from Germany
15 Pages Posted: 5 Apr 2018
Date Written: March 9, 2018
The production of electricity on the basis of renewable energy technologies is a classic example of an impure public good. It is often discriminatively financed by industrial and household consumers, such as in Germany, where the energy-intensive sector benefits from far-reaching exemptions, while all other electricity consumers are forced to bear a higher burden. Based on randomized information treatments in a stated-choice experiment among about 11,000 German households, we explore whether this coercive payment rule affects households’ willingness-to-pay (WTP) for green electricity. Our central result is that reducing inequity by abolishing the exemption for the energy-intensive industry raises households’ WTP, a finding that may have high external validity.
Keywords: Stated-choice experiment, Behavioral economics, Fairness
JEL Classification: D03, D12, H41, Q20, Q50
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