Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information
AbstractIn this CPB Discussion Paper, we study how regulators may improve upon the efficiency of their energy technology adoption programs by exploiting readily observable information to limit rent extraction by firms. Using panel data on 862 investment decisions in the Netherlands, we find that rent extraction is closely linked not only to technology characteristics, but also to the firm's capital budgetting technique. In particular, we find that rms are more likely to extract rent when either the technology's pay-back period or its required investment is lower, but less likely if they do not use a formal capital budgeting technique. Standard firm characteristics, such as size and sector, correlate with firms' use of capital budgeting techniques, thereby partly resolving the regulator's asymmetric information problem.
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Bibliographic InfoPaper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 194.
Date of creation: Oct 2011
Date of revision:
Other versions of this item:
- Aalbers, R.F.T. & Vollebergh, H.R.J. & Groot, H.L.F. de, 2011. "Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information," Discussion Paper 2011-109, Tilburg University, Center for Economic Research.
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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