Subsidies for learning in renewable energy technologies under market power and emission trading
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Subsidies for learning in renewable energy technologies under market power and emission trading. / Traber, Thure; Kemfert, Claudia.
Berlin : Deutsches Institut für Wirtschaftsforschung (DIW), 2011. (DIW Discussion Papers; No. 1126).Research output: Working paper › Working papers
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TY - UNPB
T1 - Subsidies for learning in renewable energy technologies under market power and emission trading
AU - Traber, Thure
AU - Kemfert, Claudia
PY - 2011/5
Y1 - 2011/5
N2 - Under perfect competition on the output market, first best technology subsidies in the presence of learning by doing are justified by knowledge spill overs that are not accounted for by individual companies. First best output subsidies are thus depending directly on the learning effects and are, if applicable, positive. Considering electricity markets, a setting of imperfect competition is more appropriate. We show that the second best output subsidy for learning by doing in renewable energies takes the market distortion due to imperfect competition into account and is of ambiguous sign. Based on simulations with a European electricity market model, we find that second best renewable energy subsidies are positive and only insignificantly impacted by market power. By contrast, the welfare gains from an optimal subsidy are considerably higher compared to a hypothetical situation of perfect competition.
AB - Under perfect competition on the output market, first best technology subsidies in the presence of learning by doing are justified by knowledge spill overs that are not accounted for by individual companies. First best output subsidies are thus depending directly on the learning effects and are, if applicable, positive. Considering electricity markets, a setting of imperfect competition is more appropriate. We show that the second best output subsidy for learning by doing in renewable energies takes the market distortion due to imperfect competition into account and is of ambiguous sign. Based on simulations with a European electricity market model, we find that second best renewable energy subsidies are positive and only insignificantly impacted by market power. By contrast, the welfare gains from an optimal subsidy are considerably higher compared to a hypothetical situation of perfect competition.
KW - energy policy
KW - renewable energy
KW - learning by doing
KW - imperfect competition
KW - emission trading
KW - Regenerative Energie
KW - Lernprozess
KW - Elektrizitätswirtschaft
KW - Förderung regenerativer Energien
KW - Subvention
KW - Unvollkommener Wettbewerb
KW - Emissionshandel
KW - Theorie
KW - Europa
KW - Economics
M3 - Working papers
T3 - DIW Discussion Papers
BT - Subsidies for learning in renewable energy technologies under market power and emission trading
PB - Deutsches Institut für Wirtschaftsforschung (DIW)
CY - Berlin
ER -