Politická ekonomie
Politická ekonomie
Prague Economic Papers
University of Economics, Prague

Prague Economic Papers - Articles first published online

Household Ecological Preferences and Renewable Energy Spending

DOI: https://doi.org/10.18267/j.pep.713

[full text (PDF)]

Maciej Malaczewski

Published online: 12. 3. 2019

In this paper, we propose a model that demonstrates the influence of household ecological preferences on their acceptance of spending on renewable energy. The model discusses the production of energy from both non-renewable and renewable sources, the quality of the natural environment, pollution emissions, and utility maximization. If households choose to reduce pollutant emissions, they should reduce their levels of consumption. The main aspect that distinguishes the proposed model is the assumption of complementarity between physical capital and energy. This complementarity exists due to the fact that non-renewable natural resources are the main energy source throughout the world. The presented model is solved and analysed in detail. Our analysis of the model leads to the conclusion that maximizing the utility share of the total production spent on renewable energy generation depends on the relation of both preference parameters, not on each individual preference parameter. Since the presented model helps to explain several economic mechanisms, it may become incorporated into a larger model.

Keywords: complementarity between natural resources and capital, ecological preferences, energy, natural resource use, pollution

JEL Classification: O44, Q32, Q43

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