Title: Who should pay the bill for promoting green electricity? An experimental study on consumer preferences

Authors: Roland Menges, Stefan Traub

Addresses: University of Flensburg, 24937 Flensburg, Germany. ' University of Bremen, Bremen, Germany

Abstract: This paper presents an experimental investigation of the individual Willingness to Pay (WTP) for green electricity. The experimental design comprises a public-choice scenario and an individual-choice scenario. It involves three different payment vehicles for the public promotion of renewables: direct tax, indirect tax and CO2 tax. We test for the extent of free-riding, the impact of different payment vehicles on individual WTP and crowding-out effects caused by the public promotion of green electricity. Combined with data collected by means of a supplementary opinion survey, our results indicate that individuals prefer binding collective contributions rather than individual market-driven activities in this field.

Keywords: crowding out; free-riding; green electricity; taxation; WTP; willingness to pay; renewable energy; consumer preferences; public choice; individual choice; direct tax; indirect tax; carbon tax.

DOI: 10.1504/IJEP.2009.027142

International Journal of Environment and Pollution, 2009 Vol.39 No.1/2, pp.44 - 60

Published online: 16 Jul 2009 *

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