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dc.contributor.authorDIAZ-RAINEY, Ivan
dc.contributor.authorTZAVARA, Dionisia
dc.date.accessioned2009-07-06T10:00:10Z
dc.date.available2009-07-06T10:00:10Z
dc.date.issued2009
dc.identifier.issn1028-3625
dc.identifier.urihttp://hdl.handle.net/1814/11914
dc.description.abstractThis paper develops a formal model that links the willingness to pay (WTP) literature with the established innovation diffusion literature. This concern arises from an attempt to reconcile the large disparities that have been observed between actual adoption of green energy tariffs and WTP for such tariffs. These disparities have often been attributed to upward response bias and the free rider problem. However, empirical research indicates that other factors have hindered the development of green energy markets, including supply side problems and poor regulation. Using an epidemic diffusion framework our model shows how increasing consumer environmental concern driven by word of mouth and mass media communication channels results in a growing number of people who state they are WTP for green energy. The presence of upward response bias and the free rider problem result in ‘feasible adoption’ being below stated WTP. Feasible adoption is, in turn, differentiated from actual adoption by the extent of market imperfections. It is concluded that; (1) the potential of such markets may take time to reap and that the low penetration rates of today may reflect a conventional diffusion trajectory and (2); low and stable energy prices appear to be a precondition if consumers are to contribute substantively to the funding of renewables investments through green tariffs.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.relation.ispartofseriesEUI RSCASen
dc.relation.ispartofseries2009/33en
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectWillingness-to-payen
dc.subjectinnovation diffusionen
dc.subjectgreen energyen
dc.subjectenvironmental valuationen
dc.titleReconciling WTP to actual adoption of green energy tariffs: A diffusion model of an induced environmental marketen
dc.typeWorking Paperen
eui.subscribe.skiptrue


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