Monday, December 31, 2012

Estimating Arizona residents’ willingness to pay to invest in research and development in solar energy

Abstract: We estimate Arizona residents’ Willingness to Pay (WTP) to invest in a solar energy research and development fund using data obtained from a Dichotomous-Choice Contingent Valuation mail survey. We examine differences in WTP estimates using different categorizations for respondent uncertainty. We also employ both commonly used Maximum Likelihood and less frequently applied Bayesian estimation techniques. We find that respondent uncertainty has an economically significant impact on WTP estimates, while WTP estimates are robust to different estimation techniques. Our robust specification with strict uncertainty coding indicates the average Arizona household is WTP approximately $17 per month to invest in research and development in solar energy.
► We estimate Willingness to Pay using Bayesian and Maximum Likelihood.
► Willingness to Pay estimates are robust to estimation techniques.
► Arizona residents are willing to pay $17 to invest in R&D in solar energy.
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Fig. 1. Percent WTP by bid amount.
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Fig. 2. WTP draws for ML models 7–9.
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Fig. 3. WTP draws for Bayesian models 10–12. 
by Julie M. MuellerE-mail the corresponding author, The W.A. Franke College of Business, Northern Arizona University, PO Box 15066, Flagstaff, AZ 86011,United States; Tel.: +1 928 523 6612; fax: +1 928 523 7331
Energy Policy via Elsevier Science Direct 
Volume 53; February, 2013; Pages 462–476
Keywords: Contingent valuation; Bayesian estimation; Solar energy

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