Energy management contract with subsidy.

This paper presents a theoretical study of the effects of subsidizing energy contracts. The major findings are as follows. First, under the pressure of competition, technology promotion of energy service companies (ESCOs) reduces the price of energy contracts, while improving both demand and energy conservation. Second, subsidies for energy contracts improve market demand, ESCO's profits, and energy conservation. Finally, subsidies stimulate ESCO's ability to innovate, whereas competition deters innovation. [ABSTRACT FROM AUTHOR]