Equity and the Willingness to Pay for Green Electricity: Evidence from Germany
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Date
2018
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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.
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Keywords
stated-choice experiment, fairness, behavioral economics