Willingness-to-Pay for Energy Conservation and Free-Ridership on Subsidization – Evidence from Germany

Peter Grösche and Colin Vance

No 58, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Understanding the determinants of home-efficiency improvements is significant to a range of energy policy issues, including the reduction of fossil fuel use and environmental protection. This paper analyzes retrofit choices by assembling a unique data set merging a nationwide household survey from Germany with regional data on wages and construction costs. To explore the influence of both heterogeneous preferences and correlation among the utility of alternatives, conditional-, random parameters-, and error components logit models are estimated that parameterize the influence of costs, energy savings, and household-level socioeconomic attributes on the likelihood of undertaking one of 16 renovation options. We use the model coefficients to derive household-specific marginal willingness-to-pay estimates, and with these assess the extent to which free-ridership may undermine the effectiveness of recently implemented programs that subsidize the costs of retrofits.

Keywords: Heterogenous preferences; residential sector; revealed-preference data (search for similar items in EconPapers)
JEL-codes: C25 D12 Q4 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (8)

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Journal Article: Willingness to Pay for Energy Conservation and Free-Ridership on Subsidization: Evidence from Germany (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:58

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