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Germany’s Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay

Mark A. Andor, Manuel Frondel, and Colin Vance

Year: 2017
Volume: Volume 38
Number: KAPSARC Special Issue
DOI: 10.5547/01956574.38.SI1.mand
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This paper presents evidence that the accumulating cost of Germany's ambitious plan to transform its system of energy provision - the so-called Energiewende - is butting up against consumers' willingness-to-pay (WTP) for it. Following a descriptive presentation that traces the German promotion of renewable energy technologies since 2000, we draw on two stated-preference surveys conducted in 2013 and 2015 that elicit the households' WTP for green electricity. Two models are estimated, one based on a closed-ended question framed around Germany's target of 35% renewable energy in electricity provision by 2020, and the other on an open-ended format that captures changes in WTP over time. To deal with the bias that typifies hypothetical responses, the models distinguish respondents according to whether they express definite certainty in their reported WTP. The results from both models reveal a strong contrast between the households' general acceptance of supporting renewable energy technologies and their own WTP for green electricity.

Consumer Inattention, Heuristic Thinking and the Role of Energy Labels

Mark A. Andor, Andreas Gerster, and Stephan Sommer

Year: 2020
Volume: Volume 41
Number: Number 1
DOI: 10.5547/01956574.41.1.mand
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Energy labels have been introduced in many countries to increase consumers' attention to energy use in purchase decisions of durables. In a stated-choice experiment among about 5,000 German households, we implement randomized information treatments to explore how energy labels influence purchasing decisions. Our results show that adding annual operating cost information to the EU energy label promotes the choice of energy-efficient durables. In addition, we find that a majority of participants value efficiency classes beyond the economic value of the underlying energy use differences. Our results further indicate that displaying operating cost affects choices through two distinct channels: It increases the attention to operating cost and reduces the valuation of efficiency class differences.

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