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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Renewable energy policy in the presence of innovation: does government pre-commitment matter? |
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| Institution | University of Zurich |
| Series Name | Working paper series / Socioeconomic Institute |
| Number | No. 1010 |
| Date | 2010 |
| Abstract Text | In a perfectly competitive market with a possibility of technological innovation we contrast guaranteed feed-in tariffs for electricity from renewables and tradable green certificates from a dynamic efficiency and social welfare point of view. Specifically, we model decisions about the technological innovation with convex costs within the framework of a game-theoretic model, and discuss implications for optimal policy design under different assumptions regarding regulatory pre-commitment. We find that for the case of technological innovation with convex costs subsidy policies are preferable over quota-based policies. Further, in terms of dynamic efficiency, no pre-commitment policies are shown to be at least as good as the pre-commitment ones. Thus, a government with a preference for innovation being performed if the achievable cost reduction is high should be in favor of the no pre-commitment regime. |
| Official URL | http://www.econ.uzh.ch/wp.html |
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