Keywords: crowding out, free-riding, green electricity, taxation, WTP, willingness to pay, renewable energy, consumer preferences, public choice, individual choice, direct tax, indirect tax, carbon tax
Who should pay the bill for promoting green electricity? An experimental study on consumer preferences
This paper presents an experimental investigation of the individual Willingness to Pay (WTP) for green electricity. The experimental design comprises a public-choice scenario and an individual-choice scenario. It involves three different payment vehicles for the public promotion of renewables: direct tax, indirect tax and CO2 tax. We test for the extent of free-riding, the impact of different payment vehicles on individual WTP and crowding-out effects caused by the public promotion of green electricity. Combined with data collected by means of a supplementary opinion survey, our results indicate that individuals prefer binding collective contributions rather than individual market-driven activities in this field.