Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems

Olivier De Groote and Frank Verboven

No 18-957, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study a generous program to promote the adoption of solar photovoltaic (PV) systems through subsidies on future electricity production, rather than through upfront investment subsidies. We develop a tractable dynamic model of new technology adoption, also accounting for local market heterogeneity. We identify the discount factor from demand responses to variation that shifts expected future but not current utilities. Despite the massive adoption, we find that households significantly discounted the future benefits from the new technology. This implies that an upfront investment subsidy program would have promoted the technology at a much lower budgetary cost.

JEL-codes: C51 Q48 Q58 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:32966

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