Applying threshold models to donations to a green electricity fund

This study applies a threshold model proposed by Granovetter (1978) to analyze the diffusion process of donating behavior for renewable energy. We first use a stated preference survey to estimate the determinants of a decision to support the donation scheme under various predicted participation rates. Using the estimated coefficients, we simulate how herd behavior spreads and the participation rate reaches the equilibrium. The participation rate at the equilibrium is estimated as 37.88% when the suggested donation is 500 yen, while it is 17.76% when the suggested amount is 1000 yen. The influence of environmentalism and altruism is also examined, and we find that these motivations increase the participation rate by 31.51% on average. (C) 2009 Elsevier Ltd. All rights reserved.