Universität zu Köln

Ockenfels, Axel ORCID: 0000-0003-1456-0191, Werner, Peter and Edenhofer, Ottmar (2020). Pricing externalities and moral behaviour. Nature Sustainability (3). pp. 872-877. Springer Nature. ISSN 2398-9629

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Abstract

To measure how moral behaviour interacts with pricing regimes, we conduct highly controlled experiments in which trading creates pollution. We compare indirect pricing (here, a cap and trade mechanism) and direct pricing (a tax) in an otherwise equivalent setting in which ‘producers’ are incentivized to emit CO2. ‘Judges’ decide on central trading parameters that may restrict socially harmful activities. Profit maximization predicts the same producer behaviour in either setting in the absence of regulation, yet we find a substantial share of producers refraining from emitting CO2 at all. Although judges restrict behaviour in similar ways across mechanisms, direct pricing more effectively accommodates moral behaviour than the quantity policy.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Ockenfels, Axel UNSPECIFIED orcid.org/0000-0003-1456-0191 UNSPECIFIED Werner, Peter UNSPECIFIED UNSPECIFIED UNSPECIFIED Edenhofer, Ottmar UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-458221
DOI:	10.1038/s41893-020-0554-1
Journal or Publication Title:	Nature Sustainability
Number:	3
Page Range:	pp. 872-877
Date:	2020
Publisher:	Springer Nature
ISSN:	2398-9629
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Faculty of Management, Economics and Social Sciences > Economics > Microeconomics, Institutions and markets > Professorship 1 for Economics
Subjects:	Generalities, Science Economics
Funders:	Horizon 2020 ERC-2016-ADG No. 741409, Funded by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) under Germany´s Excellence Strategy – EXC 2126/1– 390838866.
Projects:	Economic Engineering of Cooperation in Modern Markets/ERC-2016-ADG No. 741409
References:	This is a post-peer-review, pre-copyedit version of an article published in Nature Sustainability. The final authenticated version is available online at: https://doi.org/10.1038/s41893-020-0554-1
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/45822