Tapping into people's impatience for better environmental subsidies

Atayev, Atabek ; Caspari, Gian ; Hillenbrand, Adrian ; Klein, Thilo

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URN: urn:nbn:de:bsz:180-madoc-662210
Document Type: Working paper
Year of publication: 2023
The title of a journal, publication series: ZEW policy brief
Volume: 2023-04
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW policy brief
Subject: 330 Economics
Abstract: This policy brief is concerned with the efficient allocation of subsidies for eco-friendly products. Examples include subsidies for cargo or e-bikes, electric cars, and energy efficient building retrofits. Inefficiencies arise when subsidies are allocated to consumers who would have bought eco-friendly products even without subsidies (inframarginal consumers). This crowds out consumers who buy eco-friendly products only when they are subsidised (marginal consumers). We show how to exploit the relative impatience of inframarginal consumers in order to increase the share of marginal consumers receiving the subsidy – thus increasing the overall efficiency of the subsidy – by lengthening the time between consumer subsidy application and subsidy receipt. We propose a uniform wait time auction which maximizes the number of marginal consumers receiving the subsidy.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.

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