Template-Type: ReDIF-Article 1.0
Author-Name:  G. Thomas Sav
Title:  The Failure of Solar Tax Incentives: A Dynamic Analysis
Classification-JEL: F0
Pages:  51-66
Volume:  Volume 7
Issue:  Number 3
Year:  1986
Abstract:  In recent years we have witnessed governmental attempts to accelerate the stock demand for energy-saving durables with financial incentives implemented through the tax mechanism. At the federal level, income tax credits for the purchase of energy-saving durable stocks were introduced through the Energy Tax Act of 1978 (Public Law 95-618). In addition, many states have enacted their own energy-saving tax incentive legislation. A substantial body of this tax legislation has been aimed at accelerating substitution of solar-produced energy for conventional, nonrenewable energy resources in the residential and commercial building sectors. Along these lines, the bulk of engineering (so-called life-cycle) cost studies accompanying much of this legislation predicted that solar tax incentives would generate widespread market penetration with little or no delay.' However, casual observation reveals that tax-induced solar energy substitutions have not been widespread.This paper presents a dynamic model of investment decisions in solar processes-a model that captures the effect of tax legislation aimed at accelerating market penetration of solar energy.
Handle: RePEc:aen:journl:1986v07-03-a04
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=1779
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