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The Establishment of the Danish Windmill Industry - Was it Worthwhile?

Research output: Working paperResearch

The paper examines the welfare effects of the Danish subsidies towards the production of electricity from windpower. This policy has been a precondition for the remarkable development of the Danish windmill industry resulting in a dominant position on the world market. The article demonstrates a strong learning-by-doing productivity growth in the Danish windmill industry and it analyses the costs and benefits of this infant industry case. The costs consist of the efficiency loss from diverting production of electricity from using fossil fuels to utilizing windpower. In making up the benefits the environmental damage of using fossil fuels should in principle be taken into account. However, the environmental effect is only evaluated by calculating an implicit price of the emission of carbon dioxide. The main benefits are related to the emergence of a new export sector. As the value of the windmill companies at the stock exchange by far exceeds that of the accumulated distorted loss in production of electricity, this case seems to make up an example of a successful infant industry strategy.
Original languageEnglish
Publication statusPublished - 2002

    Research areas

  • Learning-by-Doing, Infant Industry, Green Subsidies

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ID: 32303463