Learning-by-Doing and the Optimal Solar Policy in California
Abstract
Much policy attention has been given to promote fledgling energy technologies that promise to reduce our reliance on fossil fuels. These policies often aim to correct market failures, such as environmental externalities and learning¥by-doing (LBD). We examine the implications of the assumption that LBD exists, quantifying the market failure due to LBD. We develop a model of technological advancement based on LBD and environmental market failures to examine the economically efficient level of subsidies in CaliforniaÕs solar photovoltaic market. Under central-case parameter estimates, including nonappropriable LBD, we find that maximizing net social benefits implies a solar subsidy schedule similar in magnitude to the recently implemented California Solar Initiative. This result holds for a wide range of LBD parameters. However, with no LBD, the subsidies cannot be justified by the environmental externality alone.Download Info
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Bibliographic Info
Article provided by International Association for Energy Economics in its journal The Energy Journal.
Volume (Year): 29 (2008)
Issue (Month): 3 ()
Pages: 131-152
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Handle: RePEc:aen:journl:2008v29-03-a07
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- F0 - International Economics - - General
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- John Foster & Liam Wagner & Phil Wild & Junhua Zhao & Lucas Skoofa & Craig Froome & Ariel Liebman, 2011.
"Market and Economic Modelling of the Intelligent Grid: End of Year Report 2010,"
Energy Economics and Management Group Working Papers
10, School of Economics, University of Queensland, Australia.
- John Foster & Liam Wagner & Phil Wild & Junhua Zhao & Lucas Skoofa & Craig Froome, 2011. "Market and Economic Modelling of the Intelligent Grid: End of Year Report 2009," Energy Economics and Management Group Working Papers 09, School of Economics, University of Queensland, Australia.
- Joan Canton & Åsa Johannesson Lindén, 2010. "Support schemes for renewable electricity in the EU," European Economy - Economic Papers 408, Directorate General Economic and Monetary Affairs, European Commission.
- Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W.H. Parry & William A. Pizer, 2009.
"Designing Climate Mitigation Policy,"
NBER Working Papers
15022, National Bureau of Economic Research, Inc.
- Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W. H. Parry & William A. Pizer, 2010. "Designing Climate Mitigation Policy," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 903-34, December.
- Aldy, Joseph E. & Krupnick, Alan J. & Newell, Richard G. & Parry, Ian W.H. & Pizer, William A., 2009. "Designing Climate Mitigation Policy," Discussion Papers dp-08-16, Resources For the Future.
- Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less than the Sum of Its Parts?," Discussion Papers dp-10-19, Resources For the Future.
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