Sustainability of renewable energy investment motivations during a feed-in-tariff scheme transition: evidence from a laboratory experiment

Jun Maekawa (), Koji Shimada and Ai Takeuchi ()
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Jun Maekawa: Ritsumeikan University
Ai Takeuchi: Ritsumeikan University

The Japanese Economic Review, 2022, vol. 73, issue 1, No 5, 83-101

Abstract: Abstract This study analyzes the effects of a feed-in-tariff (FIT) scheme’s transition on renewable energy investments. We model an individual’s investment decisions as a public goods game where the FIT scheme’s purchasing price acts as a subsidy that lowers the individual’s investment cost. Using a laboratory experiment, we study the effects of a decreasing purchasing price by comparing it to a counterfactual situation where the FIT scheme is not introduced. Although a high purchasing price induces higher investments, this external incentive seems to crowd out an individual’s intrinsic motivation: when the purchasing price decreases to zero, an individual’s investments are lower than they are in the counterfactual situation. Considering the possibility that motivation crowding out has occurred during the FIT phase-out process, it is important to introduce a new policy instrument without a break to stimulate renewable energy investments.

Keywords: Feed-in-tariff scheme; Renewable energy; Public goods game; Laboratory experiment; Motivation crowding out (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s42973-021-00093-9

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