Promoting Renewable Electricity Generation in Imperfect Markets: Price vs. Quantity Policies
The 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.
|Date of creation:||Jul 2008|
|Date of revision:||May 2009|
|Contact details of provider:|| Web page: http://www.eonerc.rwth-aachen.de/fcn|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin L. Weitzman, 1974.
"Prices vs. Quantities,"
Review of Economic Studies,
Oxford University Press, vol. 41(4), pages 477-491.
- M. L. Weitzman, 1973. "Prices vs. Quantities," Working papers 106, Massachusetts Institute of Technology (MIT), Department of Economics.
- Lauber, Volkmar, 2004. "REFIT and RPS: options for a harmonised Community framework," Energy Policy, Elsevier, vol. 32(12), pages 1405-1414, August.
- Tsoutsos, Theocharis & Frantzeskaki, Niki & Gekas, Vassilis, 2005. "Environmental impacts from the solar energy technologies," Energy Policy, Elsevier, vol. 33(3), pages 289-296, February.
- Weiyu Gao & Reinhard Madlener & Peter Zweifel, 2005. "Promoting renewable electricity generation in imperfect markets: price vs. quantity control," CEPE Working paper series 05-45, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Berry, David, 2002. "The market for tradable renewable energy credits," Ecological Economics, Elsevier, vol. 42(3), pages 369-379, September.
- Bode, Sven & Groscurth, Helmuth-Michael, 2006. "Zur Wirkung des EEG auf den "Strompreis"," HWWA Discussion Papers 348, Hamburg Institute of International Economics (HWWA).
- David M. Newbery, 2002. "Privatization, Restructuring, and Regulation of Network Utilities," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640481.
- Pizer, William A., 1999. "The optimal choice of climate change policy in the presence of uncertainty," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 255-287, August.
- Madlener, Reinhard & Stagl, Sigrid, 2005. "Sustainability-guided promotion of renewable electricity generation," Ecological Economics, Elsevier, vol. 53(2), pages 147-167, April.
- Denicolo, Vincenzo, 1999. "Pollution-Reducing Innovations under Taxes or Permits," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 184-199, January.
- V. Denicolo, 1997. "Pollution-Reducing Innovations Under Taxes or Permits," Working Papers 281, Dipartimento Scienze Economiche, Universita' di Bologna.
- Nishio, Kenichiro & Asano, Hiroshi, 2006. "Supply amount and marginal price of renewable electricity under the renewables portfolio standard in Japan," Energy Policy, Elsevier, vol. 34(15), pages 2373-2387, October.
- Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, December.
- Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521311120, December.
- Abbasi, S. A. & Abbasi, Naseema, 2000. "The likely adverse environmental impacts of renewable energy sources," Applied Energy, Elsevier, vol. 65(1-4), pages 121-144, April.
- Weitzman, Martin L, 1978. "Optimal Rewards for Economic Regulation," American Economic Review, American Economic Association, vol. 68(4), pages 683-691, September.
- Soderholm, Patrik & Sundqvist, Thomas, 2003. "Pricing environmental externalities in the power sector: ethical limits and implications for social choice," Ecological Economics, Elsevier, vol. 46(3), pages 333-350, October.
- Amundsen, Eirik S. & Mortensen, Jorgen Birk, 2001. "The Danish Green Certificate System: some simple analytical results," Energy Economics, Elsevier, vol. 23(5), pages 489-509, September.
- Jensen, S. G. & Skytte, K., 2002. "Interactions between the power and green certificate markets," Energy Policy, Elsevier, vol. 30(5), pages 425-435, April.
- Amundsen, Eirik S. & Mortensen, Jorgen Birk, 2002. "Erratum to "The Danish Green Certificate System: some simple analytical results": [Energy Economics 23 (2001) 489-509]," Energy Economics, Elsevier, vol. 24(5), pages 523-524, September.
- Langniss, Ole & Wiser, Ryan, 2003. "The renewables portfolio standard in Texas: an early assessment," Energy Policy, Elsevier, vol. 31(6), pages 527-535, May.
- Fan, J. & Sun, W. & Ren, D. -M., 2005. "Renewables portfolio standard and regional energy structure optimisation in China," Energy Policy, Elsevier, vol. 33(3), pages 279-287, February.
- Reinhard Madlener & Ilja Neustadt, 2010. "Renewable energy policy in the presence of innovation: does government pre-commitment matter?," SOI - Working Papers 1010, Socioeconomic Institute - University of Zurich.
- Madlener, Reinhard & Neustadt, Ilja, 2010. "Renewable Energy Policy in the Presence of Innovation: Does Government Pre-Commitment Matter?," FCN Working Papers 4/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Jun 2010.
- Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
- Burtraw, Dallas & Palmer, Karen, 2005. "Cost-Effectiveness of Renewable Electricity Policies," Discussion Papers dp-05-01, Resources For the Future.
- Sáenz de Miera, Gonzalo & del Rio González, Pablo & Vizcaino, Ignacio, 2008. "Analysing the impact of renewable electricity support schemes on power prices: The case of wind electricity in Spain," Energy Policy, Elsevier, vol. 36(9), pages 3345-3359, September.
- Berry, Trent & Jaccard, Mark, 2001. "The renewable portfolio standard:: design considerations and an implementation survey," Energy Policy, Elsevier, vol. 29(4), pages 263-277, March.
- Dinica, Valentina & Arentsen, Maarten J., 2003. "Green certificate trading in the Netherlands in the prospect of the European electricity market," Energy Policy, Elsevier, vol. 31(7), pages 609-620, June. Full references (including those not matched with items on IDEAS)