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Title:Subsidies for renewable energies in the presence of learning effects and market power PDF Logo
Authors:Reichenbach, Johanna
Requate, Till
Issue Date:2011
Series/Report no.:Kiel Working Papers 1689
Abstract:We study the impact of learning by doing, learning spill-overs, and imperfect competition in a model with two types of electricity producers, an oligopolistic sector of polluting fossil-fuel utilities and a competitive fringe of non-polluting generators of electricity from renewable energy sources (RES-E). Furthermore we consider an upstream industry of RES-E equipment producers engaged in learning by doing. We show that a first-best policy requires two instruments, a tax in the fossil-fuel sector and an output subsidy for RES-E equipment producers. We then study second-best-optimal feed-in tariffs that are paid to the generators of RES-E. By means of simulations we calculate the welfare loss of a second-best-optimal feed-in-tariff policy and analyze how market structure impacts on second-best-optimal feed-in tariffs.
Subjects:Feed-in tariffs
environmental subsidies
learning by doing
spill-overs
market structure
JEL:Q42
L13
O38
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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