Abstract
We analyze the efficient subsidy for durable good technologies. We the-oretically demonstrate that a policy maker faces a tension between intertemporally price discriminating by designing a subsidy that increases over time and taking advan-tage of future technological progress by designing a subsidy that decreases over time. Using dynamic estimates of household preferences for residential solar in California, we show that the efficient subsidy increases over time. The regulator’s spending quin-tuples when households anticipate future technological progress and future subsidies.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1197-1234 |
| Number of pages | 38 |
| Journal | Journal of the Association of Environmental and Resource Economists |
| Volume | 9 |
| Issue number | 6 |
| DOIs | |
| State | Published - Nov 2022 |
Keywords
- durable good
- dynamics
- expectations
- foresight
- price discrimination
- solar
- subsidy
- technological change
ASJC Scopus subject areas
- Economics and Econometrics
- Nature and Landscape Conservation
- Management, Monitoring, Policy and Law