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Effects of consumer subsidies for renewable energy on industry growth and social welfare: The case of solar photovoltaic systems in Japan

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  • Myojo, Satoshi
  • Ohashi, Hiroshi
Abstract
The primary goal of policies to promote renewable energy is to correct for the unpriced pollution externalities from burning fossil fuels. It is, however, difficult to assess whether and to what extent these policies enhance industry growth and economic welfare, especially when no comparable data on a proper control group are available. This paper provides an empirical framework to tackle such a problem with a particular focus on the use of consumer subsidies for installing residential solar photovoltaic systems in Japan. The presented estimates show elastic demand, and small learning by doing along with modest learning spillovers in production. Our simulations show that, while the subsidies are an effective instrument to encourage the greater use of solar panels, they would exacerbate social surplus unless the value of mitigating CO2 emission is well above the ongoing market price.

Suggested Citation

  • Myojo, Satoshi & Ohashi, Hiroshi, 2018. "Effects of consumer subsidies for renewable energy on industry growth and social welfare: The case of solar photovoltaic systems in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 48(C), pages 55-67.
    • Handle: RePEc:eee:jjieco:v:48:y:2018:i:c:p:55-67
    DOI: 10.1016/j.jjie.2017.11.001
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    Cited by:

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    2. Kristina Knüpfer & Samuel Matthew G. Dumlao & Miguel Esteban & Tomoya Shibayama & Keiichi N. Ishihara, 2021. "Analysis of PV Subsidy Schemes, Installed Capacity and Their Electricity Generation in Japan," Energies, MDPI, vol. 14(8), pages 1-21, April.
    3. Olga V. Loseva & Svetlana V. Karpova & Konstantin O. Rasteryaev & Elizaveta S. Sokolova & Svetlana V. Makar & Khvicha P. Kharchilava, 2020. "Sustainable Energy in Island States: Comparative Analysis of New Trends in Energy Digitalization and the Experience of the UK, Japan, Indonesia and Cyprus," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 722-731.
    4. Ogundiran Soumonni & Kalu Ojah, 2022. "Innovative and mission‐oriented financing of renewable energy in Sub‐Saharan Africa: A review and conceptual framework," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(1), January.
    5. Hao, Peng & Guo, Jun-Peng & Chen, Yihsu & Xie, Bai-Chen, 2020. "Does a combined strategy outperform independent policies? Impact of incentive policies on renewable power generation," Omega, Elsevier, vol. 97(C).
    6. Jing Li & Bingqing Liang & Zhenjun Yan, 2022. "Too Much of a Good Thing? The Impact of Government Subsidies on Incubator Services: Empirical Evidence from China," Sustainability, MDPI, vol. 14(21), pages 1-23, November.
    7. Piotr Olczak & Dominik Kryzia & Dominika Matuszewska & Marta Kuta, 2021. "“My Electricity” Program Effectiveness Supporting the Development of PV Installation in Poland," Energies, MDPI, vol. 14(1), pages 1-16, January.
    8. Magdalena Grębosz-Krawczyk & Agnieszka Zakrzewska-Bielawska & Sylwia Flaszewska, 2021. "From Words to Deeds: The Impact of Pro-Environmental Self-Identity on Green Energy Purchase Intention," Energies, MDPI, vol. 14(18), pages 1-17, September.
    9. Yu-Ling Hsiao, Cody & Ai, Dan & Wei, Xinyang & Sheng, Ni, 2021. "The contagious effect of China’s energy policy on stock markets: The case of the solar photovoltaic industry," Renewable Energy, Elsevier, vol. 164(C), pages 74-86.
    10. Magdalena Grębosz-Krawczyk & Agnieszka Zakrzewska-Bielawska & Beata Glinka & Aldona Glińska-Neweś, 2021. "Why Do Consumers Choose Photovoltaic Panels? Identification of the Factors Influencing Consumers’ Choice Behavior regarding Photovoltaic Panel Installations," Energies, MDPI, vol. 14(9), pages 1-20, May.
    11. Amiri-Pebdani, Sima & Alinaghian, Mahdi & Khosroshahi, Hossein, 2023. "A game theoretic approach for time-of-use pricing with considering renewable portfolio standard effects and investment in energy storage technologies under government interventions," Energy, Elsevier, vol. 282(C).
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    13. Małgorzata Rataj & Justyna Berniak-Woźny & Marlena Plebańska, 2021. "Poland as the EU Leader in Terms of Photovoltaic Market Growth Dynamics—Behind the Scenes," Energies, MDPI, vol. 14(21), pages 1-19, October.

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    More about this item

    Keywords

    Subsidies; Solar photovoltaic; Externalities; Social welfare; Learning by doing; Oligopoly;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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