Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information
AbstractIn this 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 firms 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-109.
Date of creation: 2011
Date of revision:
Contact details of provider:
Web page: http://center.uvt.nl
rent extraction; tagging; tax expenditure programs; technology adoption subsidies; investment decisions; bivariate probit model;
Other versions of this item:
- Rob Aalbers & Henri de Groot & Herman R.J. Vollebergh, 2011. "Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information," CPB Discussion Paper 194, CPB Netherlands Bureau for Economic Policy Analysis.
- 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
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chandra, Ambarish & Gulati, Sumeet & Kandlikar, Milind, 2010. "Green drivers or free riders? An analysis of tax rebates for hybrid vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 78-93, September.
- Wirl, Franz, 1999. "Conservation Incentives for Consumers," Journal of Regulatory Economics, Springer, vol. 15(1), pages 23-40, January.
- Stephen J. Decanio & William E. Watkins, 1998. "Investment In Energy Efficiency: Do The Characteristics Of Firms Matter?," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 95-107, February.
- Rob Aalbers & Eline van der Heijden & Jan Potters & Daan van Soest & Herman Vollebergh, 2007.
"Technology Adoption Subsidies: An Experiment with Managers,"
Tinbergen Institute Discussion Papers
07-082/3, Tinbergen Institute.
- Aalbers, Rob & van der Heijden, Eline & Potters, Jan & van Soest, Daan & Vollebergh, Herman, 2009. "Technology adoption subsidies: An experiment with managers," Energy Economics, Elsevier, vol. 31(3), pages 431-442, May.
- Aalbers, R.F.T. & Heijden, E.C.M. van der & Potters, J.J.M. & Soest, D.P. van & Vollebergh, H.R.J., 2007. "Technology Adoption Subsidies: An Experiment with Managers," Open Access publications from Tilburg University urn:nbn:nl:ui:12-347756, Tilburg University.
- Aalbers, R.F.T. & Heijden, E.C.M. van der & Potters, J.J.M. & Soest, D.P. van & Vollebergh, H.R.J., 2009. "Technology adoption subsidies: An experiment with managers," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3557320, Tilburg University.
- Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516 Elsevier.
- Pindyck, Robert, 1989.
"Irreversibility, uncertainty, and investment,"
Policy Research Working Paper Series
294, The World Bank.
- Pindyck, Robert S., 1990. "Irreversibility, uncertainty, and investment," Working papers 3137-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Robert S. Pindyck, 1990. "Irreversibility, Uncertainty, and Investment," NBER Working Papers 3307, National Bureau of Economic Research, Inc.
- Wirl, Franz, 1995. "Strategic consumers' reactions to conservation incentives," Utilities Policy, Elsevier, vol. 5(2), pages 109-113, April.
- Franz Wirl, 2000. "Lessons from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-108.
- Sarnat, Marshall & Levy, Haim, 1969. "The Relationship of Rules of Thumb to the Internal Rate of Return: A Restatement and Generalization," Journal of Finance, American Finance Association, vol. 24(3), pages 479-90, June.
- Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
- Parsons, Donald O., 1996. "Imperfect 'tagging' in social insurance programs," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 183-207, October.
- Train,Kenneth E., 2009.
"Discrete Choice Methods with Simulation,"
Cambridge University Press, number 9780521747387, April.
- Frank J. Convery, 2011. "Reflections--Energy Efficiency Literature for Those in the Policy Process," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 172-191, Winter.
- Gallagher, Kelly Sims & Muehlegger, Erich, 2008.
"Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology,"
Working Paper Series
rwp08-009, Harvard University, John F. Kennedy School of Government.
- Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
- Zivin, Joshua Graff & Zilberman, David, 2002. "Optimal Environmental Health Regulations with Heterogeneous Populations: Treatment versus "Tagging"," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 455-476, May.
- Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
- Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 759-89, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Broekman).
If references are entirely missing, you can add them using this form.