Article

Subsidies and Time Discounting in New Technology Adoption

Evidence from Solar Photovoltaic Systems

Olivier De Groote et Frank Verboven

Résumé

We study a generous program to promote the adoption of solar photovoltaic (PV) systems through subsidies on future electricity production, rather than through upfront investment subsidies. We develop a tractable dynamic model of new technology adoption, also accounting for local market heterogeneity. We identify the discount factor from demand responses to variation that shifts expected future but not current utilities. Despite the massive adoption, we find that households significantly discounted the future benefits from the new technology. This implies that an upfront investment subsidy program would have promoted the technology at a much lower budgetary cost.

Codes JEL

  • C51: Model Construction and Estimation
  • Q48: Government Policy
  • Q58: Government Policy

Remplace

Olivier De Groote et Frank Verboven, « Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems », TSE Working Paper, n° 18-957, septembre 2018.

Référence

Olivier De Groote et Frank Verboven, « Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems », American Economic Review, vol. 109, n° 6, 2019, p. 2137–2172.

Publié dans

American Economic Review, vol. 109, n° 6, 2019, p. 2137–2172