Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Asymmetric Incentives in Subsidies: Evidence from a Large-Scale Electricity Rebate Program †

Asymmetric Incentives in Subsidies: Evidence from a Large-Scale Electricity Rebate Program † Abstract Many countries use substantial public funds to subsidize reductions in negative externalities. Such policy designs create asymmetric incentives because increases in externalities remain unpriced. I investigate the implications of such policies by using a regression discontinuity design in California's electricity rebate program. Using household-level panel data, I find that the incentive produced precisely estimated zero treatment effects on energy conservation in coastal areas. In contrast, the rebate induced short-run and long-run consumption reductions in inland areas. Income, climate, and air conditioner saturation significantly drive the heterogeneity. Finally, I provide a cost-effectiveness analysis and investigate how to improve the policy design. (JEL D12, D62, H76, L94, L98, Q48 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Asymmetric Incentives in Subsidies: Evidence from a Large-Scale Electricity Rebate Program †

Download PDF
29 pages

Loading next page...
 
/lp/american-economic-association/asymmetric-incentives-in-subsidies-evidence-from-a-large-scale-psEGEUMQOw
Publisher
American Economic Association
Copyright
Copyright © 2015 by the American Economic Association
Subject
Articles
ISSN
1945-7731
eISSN
1945-774X
DOI
10.1257/pol.20130397
Publisher site
See Article on Publisher Site

Abstract

Abstract Many countries use substantial public funds to subsidize reductions in negative externalities. Such policy designs create asymmetric incentives because increases in externalities remain unpriced. I investigate the implications of such policies by using a regression discontinuity design in California's electricity rebate program. Using household-level panel data, I find that the incentive produced precisely estimated zero treatment effects on energy conservation in coastal areas. In contrast, the rebate induced short-run and long-run consumption reductions in inland areas. Income, climate, and air conditioner saturation significantly drive the heterogeneity. Finally, I provide a cost-effectiveness analysis and investigate how to improve the policy design. (JEL D12, D62, H76, L94, L98, Q48 )

Journal

American Economic Journal: Economic Policy – American Economic Association

Published: Aug 1, 2015

There are no references for this article.