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An Experimental Study on the Gap between Willingness to Pay and Willingness to Donate for Green Electricity

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  • Roland Menges
  • Stefan Traub

Abstract

We experimentally investigate the gap between willingness to pay and willingness to donate in the context of the promotion of green electricity. The experiment involves two differing scenarios (public choice versus individual choice) and two distinct public payment vehicles (direct tax versus indirect tax). Our main result is that subjects´ WTP significantly exceeds WTD, by a factor of three. Regression analysis shows that our results remain robust when controlling for personal characteristics and attitudes. We conclude from our results that our subjects perceived the promotion of environmental quality as a public duty rather than an individual task.

Suggested Citation

  • Roland Menges & Stefan Traub, 2009. "An Experimental Study on the Gap between Willingness to Pay and Willingness to Donate for Green Electricity," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(3), pages 335-357, September.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200909)65:3_335:aesotg_2.0.tx_2-d
    DOI: 10.1628/001522108X477804
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    Citations

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    Cited by:

    1. Mark A. Andor, Manuel Frondel, and Colin Vance, 2017. "Germanys Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    2. Löschel, Andreas & Sturm, Bodo & Uehleke, Reinhard, 2013. "Revealed preferences for climate protection when the purely individual perspective is relaxed: Evidence from a framed field experiment," ZEW Discussion Papers 13-006, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Herbes, Carsten & Friege, Christian & Baldo, Davide & Mueller, Kai-Markus, 2015. "Willingness to pay lip service? Applying a neuroscience-based method to WTP for green electricity," Energy Policy, Elsevier, vol. 87(C), pages 562-572.
    4. Oberst, Christian & Madlener, Reinhard, 2015. "Prosumer Preferences Regarding the Adoption of Micro‐Generation Technologies: Empirical Evidence for German Homeowners," FCN Working Papers 22/2014, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    5. Czap, Natalia V. & Czap, Hans J. & Khachaturyan, Marianna & Lynne, Gary D. & Burbach, Mark, 2012. "Walking in the shoes of others: Experimental testing of dual-interest and empathy in environmental choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 642-653.
    6. Andor Mark A. & Frondel Manuel & Vance Colin, 2014. "Hypothetische Zahlungsbereitschaft für grünen Strom: Bekundete Präferenzen privater Haushalte für das Jahr 2013," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(4), pages 355-366, December.
    7. Löschel, Andreas & Sturm, Bodo & Uehleke, Reinhard, 2017. "Revealed preferences for voluntary climate change mitigation when the purely individual perspective is relaxed – evidence from a framed field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 149-160.
    8. Carsten Herbes & Lorenz Braun & Dennis Rube, 2016. "Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies," Energies, MDPI, Open Access Journal, vol. 9(4), pages 1-15, March.
    9. repec:gam:jeners:v:9:y:2016:i:4:p:252:d:66797 is not listed on IDEAS

    More about this item

    Keywords

    free-riding; green electricity; impure altruism; willingness to donate; willingness to pay;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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