Green marketing, renewables, and free riders: increasing customer demand for a public good

Technical Report · Mon Sep 01 04:00:00 EDT 1997

DOI:https://doi.org/10.2172/645498· OSTI ID:645498

Wiser, R; Pickle, S

Retail electricity competition will allow customers to select their own power suppliers and some customers will make purchase decisions based, in part, on their concern for the environment. Green power marketing targets these customers under the assumption that they will pay a premium for ``green`` energy products such as renewable power generation. But renewable energy is not a traditional product because it supplies public goods; for example, a customer supporting renewable energy is unable to capture the environmental benefits that their investment provides to non-participating customers. As with all public goods, there is a risk that few customers will purchase ``green`` power and that many will instead ``free ride`` on others` participation. By free riding, an individual is able to enjoy the benefits of the public good while avoiding payment. This report reviews current green power marketing activities in the electric industry, introduces the extensive academic literature on public goods, free riders, and collective action problems, and explores in detail the implications of this literature for the green marketing of renewable energy. Specifically, the authors highlight the implications of the public goods literature for green power product design and marketing communications strategies. They emphasize four mechanisms that marketers can use to increase customer demand for renewable energy. Though the public goods literature can also contribute insights into the potential rationale for renewable energy policies, they leave most of these implications for future work (see Appendix A for a possible research agenda).

• Research Organization: Lawrence Berkeley National Lab., CA (United States)
• Sponsoring Organization: USDOE Assistant Secretary for Energy Efficiency and Renewable Energy, Washington, DC (United States)
• DOE Contract Number: AC03-76SF00098
• OSTI ID: 645498
• Report Number(s): LBNL--40632; ON: DE98052832
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
ELECTRIC POWER
ENVIRONMENTAL IMPACTS
MARKETING
RENEWABLE ENERGY SOURCES
RETAIL PRICES