January 9, 2011

The Behavioral Response to Voluntary Provision of an Environmental Public Good: Evidence from Residential Electricity Demand

by Grant D. Jacobsen, Matthew J. Kotchen and Michael P. Vandenbergh

- This paper develops a theory of voluntary provision of a public good in which a household’s decision to engage in a form of environmentally friendly behavior is based on the desire to offset another behavior that is environmentally harmful. The model generates predictions about (1) participation in a green-electricity program at the extensive and intensive margins, and (2) changes in electricity consumption in response to participation. We test the theory using billing data for participants and nonparticipants in a green-electricity program in Memphis, Tennessee.

Jacobsen, G.D., M.J. Kotchen, M.P. Vandenbergh (2010). "The Behavioral Response to Voluntary Provision of an Environmental Public Good: Evidence from Residential Electricity Demand." NBER Working Paper No. 16608, Dec 2010.