Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment
Xavier Gassmann and
Energy Economics, 2017, vol. 68, issue S1, 33-44
The cost-effectiveness of energy technology upgrade programs critically depends on free riding. This paper assesses ex ante the effects of free riding on the cost-effectiveness of a rebate program that promotes the adoption of energy-efficient heating systems, relying on contingent valuation choice experiments carried out through identical representative surveys in eight EU Members States. The analysis distinguishes between strong and weak free riders: strong free riders already plan to adopt a new heating system in the next five years; weak free riders decide to purchase once propositioned with an attractive technology package (and therefore do not require a rebate to adopt). The reservation rebates for incentivized adopters (those who decide to adopt because of a rebate) differ substantially across countries. On average, they amount to approximately 40% of the heating system's purchasing price, suggesting generally high opportunity costs for premature upgrades. The reservation rebate and weak free-ridership vary with income, risk and time preferences, and environmental identity. At a rebate level that corresponds to half the purchase price of the offered heating system, the estimated share of free riders exceeded 50% for most countries, with a typically higher share of weak free riders than strong free riders. Specific rebate cost estimates (in €/tCO2) differ considerably across countries, suggesting that cooperation can yield budgetary benefits.
Keywords: Free rider; Subsidies; Energy efficiency; Contingent valuation (search for similar items in EconPapers)
JEL-codes: Q41 Q48 Q51 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:68:y:2017:i:s1:p:33-44
Access Statistics for this article
Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant
More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().