Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Renewable Energy 3 Location: B133 Session Chair: Kiso Takahiko, University of Aberdeen | |
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Optimal Subsidy Targeting with Pigouvian, Ramsey, and Equity Objectives University of Aberdeen, United Kingdom This paper develops a normative framework for designing corrective subsidy programs in a second-best setting in which policymakers pursue externality correction under a program budget constraint while also considering equitable redistribution, and in which subsidy eligibility and levels may vary across recipient classes defined by observable, difficult-to-manipulate characteristics, such as income. We characterize optimal targeting at both the extensive and intensive margins and decompose the subsidy for each eligible class into three components---Pigouvian (externality correction), Ramsey (cost-effectiveness), and equity---whose relative importance is governed by the shadow value of the program budget. We show how the optimal design varies with class-specific subsidy responsiveness, policymakers' distributional preferences, positive externalities, program budget size, and production costs. The core decomposition carries over to an extension featuring product differentiation and imperfect competition. | |