IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20070082.html
   My bibliography  Save this paper

Technology Adoption Subsidies: An Experiment with Managers

Author

Listed:
  • Rob Aalbers

    () (SEO Economic Research, Amsterdam)

  • Eline van der Heijden

    () (Tilburg University)

  • Jan Potters

    () (Tilburg University)

  • Daan van Soest

    () (Tilburg University)

  • Herman Vollebergh

    () (Erasmus University Rotterdam)

Abstract

We evaluate the impact of technology adoption subsidies on in- vestment behavior in an individual choice experiment. In a laboratory setting professional managers are confronted with an intertemporal decision problem in which they have to decide whether or not to search for, and possibly adopt, a new technology. Technologies differ in the per-period benefits they yield, and their purchase price increases with the per-period benefits provided. We introduce a subsidy on the more expensive technologies (that also yield the larger per-period benefits), and find that the subsidy scheme induces agents to search for and adopt these more expensive technologies even though the subsidy itself is too small to render these technologies profitable. We speculate that the result is driven by the positive connotation (affect) that the concept 'subsidy' invokes.

Suggested Citation

  • Rob Aalbers & Eline van der Heijden & Jan Potters & Daan van Soest & Herman Vollebergh, 2007. "Technology Adoption Subsidies: An Experiment with Managers," Tinbergen Institute Discussion Papers 07-082/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20070082
    as

    Download full text from publisher

    File URL: http://papers.tinbergen.nl/07082.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stephen J. Decanio & William E. Watkins, 1998. "Investment In Energy Efficiency: Do The Characteristics Of Firms Matter?," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 95-107, February.
    2. Eric Malm, 1996. "An Actions-Based Estimate of the Free Rider Fraction in Electric Utility DSM Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 41-48.
    3. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
    4. Sonnemans, Joep, 1998. "Strategies of search," Journal of Economic Behavior & Organization, Elsevier, vol. 35(3), pages 309-332, April.
    5. Cox, James C & Oaxaca, Ronald L, 1992. "Direct Tests of the Reservation Wage Property," Economic Journal, Royal Economic Society, vol. 102(415), pages 1423-1432, November.
    6. Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2007. "Estimating Risk Attitudes in Denmark: A Field Experiment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(2), pages 341-368, June.
    7. Marieke de Vries & Rob W. Holland & Cilia L. M. Witteman, 2008. "In the winning mood: Affect in the Iowa gambling task," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3, pages 42-50, January.
    8. Walsh, Michael J., 1989. "Energy tax credits and housing improvement," Energy Economics, Elsevier, vol. 11(4), pages 275-284, October.
    9. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 41-74.
    10. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    11. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
    12. Sonnemans, Joep, 2000. "Decisions and strategies in a sequential search experiment," Journal of Economic Psychology, Elsevier, vol. 21(1), pages 91-102, February.
    13. Cox, James C & Oaxaca, Ronald L, 1989. "Laboratory Experiments with a Finite-Horizon Job-Search Model," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 301-329, September.
    14. Brian M. Lucey & Michael Dowling, 2005. "The Role of Feelings in Investor Decision-Making," Journal of Economic Surveys, Wiley Blackwell, vol. 19(2), pages 211-237, April.
    15. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    16. Schotter, Andrew & Braunstein, Yale M, 1981. "Economic Search: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 19(1), pages 1-25, January.
    17. Hassett, Kevin A. & Metcalf, Gilbert E., 1995. "Energy tax credits and residential conservation investment: Evidence from panel data," Journal of Public Economics, Elsevier, vol. 57(2), pages 201-217, June.
    18. Rami Zwick & Ching Chyi Lee, 1999. "Bargaining and Search: An Experimental Study," Experimental 9902003, EconWPA.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arjan Ruijs & Herman R. J. Vollebergh, 2013. "Lessons from 15 Years of Experience with the Dutch Tax Allowance for Energy Investments for Firms," OECD Environment Working Papers 55, OECD Publishing.
    2. Ezekiel Maphisa & Gillian Marcelle & Radhika Perrot, 2012. "Nuclear energy technology adoption by intensive energy industrial users in South Africa," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 5(1/2), pages 158-183.
    3. Sjak Smulders & Michael Toman & Cees Withagen, 2014. "Growth theory and ‘green growth’," Oxford Review of Economic Policy, Oxford University Press, vol. 30(3), pages 423-446.
    4. Pedregal, D.J. & Dejuán, O. & Gómez, N. & Tobarra, M.A., 2009. "Modelling demand for crude oil products in Spain," Energy Policy, Elsevier, vol. 37(11), pages 4417-4427, November.
    5. Daan P. van Soest & Herman R.J. Vollebergh, 2011. "Energy Investment Behaviour: Firm Heterogeneity and Subsidy Design," Chapters,in: Improving Energy Efficiency through Technology, chapter 9 Edward Elgar Publishing.
    6. Vringer, Kees & Heijden, Eline Van Der & Soest, Daan Van & Vollebergh, Herman & Dietz, Frank, 2017. "Sustainable consumption dilemmas," Other publications TiSEM d683e2ed-c465-468e-b537-0, Tilburg University, School of Economics and Management.
    7. Collins, Matthew & Curtis, John, 2017. "Advertising and investment spillovers in the diffusion of residential energy efficiency renovations," Papers WP569, Economic and Social Research Institute (ESRI).
    8. Aalbers, R.F.T. & Vollebergh, H.R.J. & de Groot, H.L.F., 2011. "Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information," Discussion Paper 2011-109, Tilburg University, Center for Economic Research.
    9. Mengistu, M.G. & Simane, B. & Eshete, G. & Workneh, T.S., 2015. "A review on biogas technology and its contributions to sustainable rural livelihood in Ethiopia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 306-316.
    10. Hlavinka, Alexander N. & Mjelde, James W. & Dharmasena, Senarath & Holland, Christine, 2016. "Forecasting the adoption of residential ductless heat pumps," Energy Economics, Elsevier, vol. 54(C), pages 60-67.
    11. Kees Vringer & Eline van der Heijden & Daan van Soest & Herman Vollebergh & Frank Dietz, 2017. "Sustainable Consumption Dilemmas," Sustainability, MDPI, Open Access Journal, vol. 9(6), pages 1-21, June.
    12. Herman R.J. Vollebergh, 2006. "Differential Impact of Environmental Policy Instruments on Technological Change: A Review of the Empirical Literature," Tinbergen Institute Discussion Papers 07-042/3, Tinbergen Institute.

    More about this item

    Keywords

    framed field experiment; search model; technology subsidies;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20070082. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tinbergen Office +31 (0)10-4088900). General contact details of provider: http://edirc.repec.org/data/tinbenl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.