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Green Subsidies and Learning-by-doing in the Windmill Industry

  • Jørgen Drud Hansen

    (Centre for European Studies, University of Southern Denmark)

  • Camilla Jensen

    (Centre for East European Studies, Copenhagen Business School)

  • Erik Strøjer Madsen

    (Dept. of Economics, Aarhus School of Business)

This paper examines the remarkable learning-by-doing in the windmill industry since it emerged in the beginning of the 1980's. Green subsidies for producing electricity by wind power has been a precondition for the rapid growth in the production of windmills. Based on time series of prices of windmills a dynamic cost function for producing windmills is tested. The cost disadvantage of producing electricity by windmills relative to traditional power stations has narrowed considerably because of a strong learning-by-doing effect. The deliberate policy to subsidize production of electricity by windpower has placed Denmark in a first-mover position in this market and the future has to show whether this is a successful story of an infant industrial policy.

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Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 2001-06.

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Length: 20 pages
Date of creation: Apr 2001
Date of revision:
Handle: RePEc:kud:kuieci:2001-06
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