Green Electricity Markets as Mechanisms of Public-Goods Provision: Theory and Experimental Evidence

Authors

Arnab Mitra, Portland State UniversityFollow
Michael R. Moore, University of Michigan

Published In

Environmental and Resource Economics

Document Type

Post-Print

Publication Date

3-1-2017

Abstract

Utility-based green electricity programs provide market opportunities for consumers to reduce the carbon footprint of their electricity use. These programs deploy three types of public-goods contribution mechanisms: voluntary contribution, green tariff, and all-or-nothing green tariff (Kotchen and Moore, 2007). We extend the theoretical understanding of the all-or-nothing green tariff mechanism by showing that an assumption of warm-glow preferences is needed to explain widespread participation in programs deploying this mechanism. We conduct the first experimental test to compare the revenue generating capacity of a pure public good (based on the voluntary contribution mechanism) and an impure public good (based on the green tariff mechanism). In experimental play, the voluntary contribution mechanism raises 50% more revenue than the green tariff mechanism. With the all-or-nothing green tariff, experimental play and regression estimates show that a warm-glow preference positively affects participation, as predicted by the theory.

Rights

This version of the article has been accepted for publication, after peer review and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: http://dx.doi.org/10.1007/s10640-017-0136-5

Description

This version of the article has been accepted for publication, after peer review and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: http://dx.doi.org/10.1007/s10640-017-0136-5

DOI

10.1007/s10640-017-0136-5

Persistent Identifier

http://archives.pdx.edu/ds/psu/19955

Citation Details

Mitra, A., & Moore, M. R. (2017). Green Electricity Markets as Mechanisms of Public-Goods Provision: Theory and Experimental Evidence. Environmental and Resource Economics, 1-27.