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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.

Suggested Citation

  • Jørgen Drud Hansen & Camilla Jensen & Erik Strøjer Madsen, 2001. "Green Subsidies and Learning-by-doing in the Windmill Industry," CIE Discussion Papers 2001-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:2001-06

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    Cited by:

    1. Lindman, Åsa & Söderholm, Patrik, 2012. "Wind power learning rates: A conceptual review and meta-analysis," Energy Economics, Elsevier, vol. 34(3), pages 754-761.
    2. Nagesh Kumar & Kevin P. Gallagher, 2007. "Relevance of ‘Policy Space’ for Development : Implications for Multilateral Trade Negotiations," Trade Working Papers 22111, East Asian Bureau of Economic Research.

    More about this item


    Learning-by-doing; infant industry; green subsidies;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L6 - Industrial Organization - - Industry Studies: Manufacturing


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