Theoretical foundations of environmental policy with moral consumers

• Applicant: Professor Dr. Thomas Eichner
• Subject Area: Economic Policy, Applied Economics
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 458549222

Empirical and experimental analyses provide evidence for pro-environmental behavior of individuals. This behavior cannot be explained with the homo oeconomicus concept that is predominant in economics, but indicates that individuals have moral preferences or behave morally. Individuals with moral preferences contribute more than homines oeconomici to the public good 'environment', but competitive markets still miss the pareto-efficient allocation. Within general equilibrium models this research proposal investigates the allocative effects of environmental policy and the optimal environmental policy in economies with moral consumers. We consider both closed economies and open economies with international trade and transboundary pollution. In seven specific work programs we analyze the impact of moral preferences on (i) emissions taxes and emissions trading, (ii) optimal nudging, (iii) subsidizing renewable energy, (iv) unilateral environmental policy and (v) international environmental agreements.

• DFG Programme: Research Grants