Promoting renewable electricity generation in imperfect markets: price vs. quantity policies
AbstractThe search for economically eﬃcient policy instruments designed to promote the diffusion of renewable energy technologies in liberalized markets has led to the introduction of quota-based tradable ‘green’ certiﬁcate (TGC) schemes for renewable electricity. However, there is a debate about the pros and cons of TGC, a quantity control policy, compared to guaranteed feed-in tariffs, a price control policy. In this paper we contrast these two alternatives in terms of social welfare, taking into account that electricity markets are not perfectly competitive, and show that the price control policy dominates the quantity control policy in terms of social welfare.
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Bibliographic InfoPaper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0809.
Length: 34 pages
Date of creation: Jul 2008
Date of revision:
Tradable green certificates; Renewable portfolio standard; Quota target; Feed-in tariff; Cournot duopoly;
Other versions of this item:
- Madlener, Reinhard & Neustadt, Ilja & Zweifel, Peter, 2008. "Promoting Renewable Electricity Generation in Imperfect Markets: Price vs. Quantity Policies," FCN Working Papers 1/2008, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised May 2009.
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-COM-2008-08-31 (Industrial Competition)
- NEP-ENE-2008-08-31 (Energy Economics)
- NEP-ENV-2008-08-31 (Environmental Economics)
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