Publications by Author: Gerarden, Todd D.

2018
Gerarden, Todd D.Demanding Innovation: The Impact of Consumer Subsidies on Solar Panel Production Costs.” Cambridge, MA: Harvard Environmental Economics Program, 2018.Abstract
This paper analyzes the impacts of consumer subsidies in the global market for solar panels. Consumer subsidies can have at least two effects. First, subsidies shift out demand and increase equilibrium quantities, holding production costs fixed. Second, subsidies may encourage firms to innovate to reduce their costs over time. I quantify these impacts by estimating a dynamic structural model of competition among solar panel manufacturers. The model produces two key insights. First, ignoring long-run supply responses can generate biased estimates of the effects of government policy. Without accounting for induced innovation, subsidies increased global solar adoption 49 percent over the period 2010-2015, leading to over \$15 billion in external social benefits. Accounting for induced innovation increases the external benefits by at least 22 percent. Second, decentralized government intervention in a global market is inefficient. A subsidy in one country increases long-run solar adoption elsewhere because it increases investment in innovation by international firms. This spillover underscores the need for international coordination to address climate change.
gerarden_dp_77.pdf
2017
Coglianese, John, Todd D. Gerarden, and James Stock. “The Effects of Fuel Prices, Regulations, and Other Factors on U.S. Coal Production, 2008-2016.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2017. dp90_stock.pdf
2015
Gerarden, Todd D., Richard G. Newell, and Robert N. Stavins. “Assessing the Energy-Efficiency Gap.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2015.Abstract

Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but these technologies appear not to be adopted by consumers and businesses to the degree that would apparently be justified, even on a purely financial basis. We present two complementary frameworks for understanding this so-called “energy paradox” or “energy-efficiency gap.” First, we build on the previous literature by dividing potential explanations for the energy-efficiency gap into three categories: market failures, behavioral anomalies, and model and measurement errors. Second, we posit that it is useful to think in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices cost-minimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We review empirical evidence on these questions, with an emphasis on recent advances, and offer suggestions for future research.

duke-harvard_energy-efficiency-gap_jan15.pdf