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Identifying Free-Riding in Energy-Conservation Programs Using Revealed Preference Data

Peter Grösche, Christoph Schmidt and Colin Vance

No 99, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Identifying the incidence of free-ridership is significant to a range of issues relevant to program evaluation, including the calculation of net program benefits and more general assessments of political acceptability. Estimates of free-ridership in the area of energy policy frequently rely on ex-post surveys that ask program participants whether they would have behaved differently in the absence of program support. The present paper proposes an ex-ante approach to the calculation of the free-rider share using revealed preference data on home renovations from Germany's residential sector. We employ a discrete-choice model to simulate the effect of grants on renovation choices, the output from which is used to assess the extent of free-ridership under a contemporary subsidy program. Aside from its simplicity, a key advantage of the approach is that it bestows policymakers with an estimate of free-ridership prior to program implementation.

Keywords: Energy efficiency; residential sector; random utility model; discrete choice simulation (search for similar items in EconPapers)
JEL-codes: C25 D12 Q4 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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