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On the welfare effects of subsidy game for renewable energy investment: Toward a dynamic equilibrium model


  • Yang, Yong-cong
  • Nie, Pu-yan
  • Liu, Hui-ting
  • Shen, Ming-hao


This paper focuses on the welfare effects of subsidy game for renewable energy investment between two neighboring regions. By employing a dynamic control model, the stationary equilibrium is solved under various scenarios. The major findings indicate that, the optimal subsidy strategies for both regions depend on a series of factors, including social capital, emission intensity of traditional energy and production efficiency of renewable energy and so on. Meanwhile, neither competitive strategy nor cooperative strategy is necessarily better than the other in the bidding game. Furthermore, the effects of Pigouvian tax on subsidy intensity are negative, while the changes of the equilibrium investment of renewable energy are uncertain.

Suggested Citation

  • Yang, Yong-cong & Nie, Pu-yan & Liu, Hui-ting & Shen, Ming-hao, 2018. "On the welfare effects of subsidy game for renewable energy investment: Toward a dynamic equilibrium model," Renewable Energy, Elsevier, vol. 121(C), pages 420-428.
  • Handle: RePEc:eee:renene:v:121:y:2018:i:c:p:420-428
    DOI: 10.1016/j.renene.2017.12.097

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    References listed on IDEAS

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    18. Junlong Chen & Xinran Xie & Chaoqun Sun & Li Lin & Jiali Liu, 2022. "Optimal trade policy and welfare in a differentiated duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3019-3043, October.
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    21. Chang, Kai & Wan, Qiong & Lou, Qichun & Chen, Yili & Wang, Weihong, 2020. "Green fiscal policy and firms’ investment efficiency: New insights into firm-level panel data from the renewable energy industry in China," Renewable Energy, Elsevier, vol. 151(C), pages 589-597.
    22. Azevedo, Alcino & Pereira, Paulo J. & Rodrigues, Artur, 2021. "Optimal timing and capacity choice with taxes and subsidies under uncertainty," Omega, Elsevier, vol. 102(C).
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    24. Yang, Yong-cong & Nie, Pu-yan, 2022. "Subsidy for clean innovation considered technological spillover," Technological Forecasting and Social Change, Elsevier, vol. 184(C).

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