Equity and The Willingness to Pay for Green Electricity: Evidence from Germany

15 Pages Posted: 5 Apr 2018

See all articles by Mark Andor

Mark Andor

RWI – Leibniz Institute for Economic Research

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Stephan Sommer

RWI - Leibniz-Institute for Economic Research

Date Written: March 9, 2018

Abstract

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

Suggested Citation

Andor, Mark and Frondel, Manuel and Sommer, Stephan, Equity and The Willingness to Pay for Green Electricity: Evidence from Germany (March 9, 2018). USAEE Working Paper No. 18-337. Available at SSRN: https://ssrn.com/abstract=3157024 or http://dx.doi.org/10.2139/ssrn.3157024

Mark Andor

RWI – Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

HOME PAGE: http://en.rwi-essen.de/mark-andor

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Stephan Sommer

RWI - Leibniz-Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

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