Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273464 
Year of Publication: 
2023
Series/Report no.: 
ZEW Discussion Papers No. 23-022
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
With the aim of limiting global warming, environmental subsidies are a popular public finance instrument to reduce carbon emissions. However, there is little evidence on why subsidies are effective in increasing demand for the goods subsidized. We use a framed field experiment to disentangle and study the relative importance of the price and non-price effects implicit in a subsidy encouraging an energy-efficiency investment. In the experiment, participants decide on purchasing a low-flow showerhead and are either confronted with the introduction of a subsidy or a same-sized price decrease. We find a demand increase of about 3-percent when the price decreases and a significantly larger demand increase of about 9-percent when the subsidy is introduced. An analysis of the underlying channels rules out changes in beliefs and norm perceptions. Positive spill-over effects of the subsidy on other pro-environmental behaviors rather suggest that the non-price effect is explained by a crowding in of intrinsic motivation.
Subjects: 
Behavioral public economics
subsidies
spillover
energy efficiency
field experiment
JEL: 
C93
D90
H23
Q49
Document Type: 
Working Paper

Files in This Item:
File
Size
893.59 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.