Green Subsidies and Learning-by-doing in the Windmill Industry

Jørgen Drud Hansen, Camilla Jensen and Erik Madsen
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Jørgen Drud Hansen: Centre for European Studies, University of Southern Denmark

No 2001-06, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: This paper examines the remarkable learning-by-doing in the windmill industry since it emerged in the beginning of the 1980's. Green subsidies for producing electricity by wind power has been a precondition for the rapid growth in the production of windmills. Based on time series of prices of windmills a dynamic cost function for producing windmills is tested. The cost disadvantage of producing electricity by windmills relative to traditional power stations has narrowed considerably because of a strong learning-by-doing effect. The deliberate policy to subsidize production of electricity by windpower has placed Denmark in a first-mover position in this market and the future has to show whether this is a successful story of an infant industrial policy.

Keywords: Learning-by-doing; infant industry; green subsidies (search for similar items in EconPapers)
JEL-codes: D2 L5 L6 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2001-04
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Citations: View citations in EconPapers (2)

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