Economics Research Seminar | Weatherhead School at Case Western Reserve University

Economics Research Seminar

an Unintended Effect of Subsidizing Green Technology: Lessons Learned from California


This paper presents a previously unrecognized but important consequence of subsidizing green technology in the context of California residential solar market. I show that this market is characterized by many small and local solar suppliers as well as a few large solar suppliers. Large firms advertise heavily and pursue primarily the environmentally focused consumers, whereas small and local suppliers have a limited ability to advertise and pursue primarily the economically focused consumers. Using rich micro-level data, I estimate how subsidies are apportioned between sellers and consumers among different seller-customer groups, and to what extent subsidies have stimulated adoption. The estimate is robust to a spatial discontinuity design. Contrary to many studies in the previous literature, I find very different subsidy pass-through among different groups. Large suppliers capture almost all the subsidy benefits whereas small and local suppliers concede the majority of the benefits to customers. Since customers have different motives to go solar and the solar market is opaque, endogenous matching of consumers and sellers causes this large variation in subsidy pass-through. Over half of the subsidies fail to reduce prices to consumers and encourage adoption. Instead, a large fraction of subsidies mainly yields rents to large solar suppliers to sustain their advertising-supported business model.


* Jin Chen is a Ph.D. Candidate at Stanford University and a faculty candidate in the Economics Department.

Please join the Economics Department for a research seminar.  This event is open to all Case Western Reserve University faculty, Ph.D. students, economic majors and minors, and those interested in economics research.

Contact Information:
Teresa Kabat 

Friday, Jan. 25, 2019 from 12:30 p.m. to 2 p.m.
Peter B. Lewis Building, Room 258
11119 Bellflower Road
Cleveland, OH 44106-7235
United States
Speaker(s): Jin Chen, Stanford University
Sponsored by: Economics Department
An Unintended Effect of Subsidizing Green Technology


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