Quality Uncertainty and the Market for Renewable Energy: Evidence from German Consumers

Jens Rommel, Julian Sagebiel (julian.sagebiel@slu.se) and Jakob Müller

MPRA Paper from University Library of Munich, Germany

Abstract: Consumers can choose from a wide range of electricity supply contracts, including green power options. Electricity produced from renewable energy involves information asymmetries. With a sample of more than 2,000 German electricity consumers, we tested the proposition of a “lemon market” for renewable energy in a discrete choice experiment. Specifically, we found that, compared to investor-owned firms, additional willingness-to-pay (WTP) for renewable energy is approximately double when offered by cooperatives or municipally-owned electricity utilities. Consumers who are experienced with switching suppliers have an additional WTP of one Eurocent per kilowatt hour for cooperatives and two Eurocents for public enterprises. The results demonstrate that organizational transformation in dynamically-changing electricity markets is not only driven by political initiatives but also by consumers’ choices on the market. Public policy may reduce information asymmetries by promoting government labeling of green energy products.

Keywords: Cooperatives; Discrete Choice Experiment; Germany (search for similar items in EconPapers)
JEL-codes: D12 D47 L33 L94 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-ger and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Quality uncertainty and the market for renewable energy: Evidence from German consumers (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:66195

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