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The Tragedy of the Common Heating Bill

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  • Harald Mayr
  • Mateus Souza

Abstract

Without heat metering, households face strong free-riding incentives. Using data from Swiss households, we find that the staggered introduction of submetering reduced heating expenses by 17%, on average. Machine learning techniques reveal highly heterogeneous effects, consistent with coordination failure in larger buildings and strategic exit of free-riders. We find that households are price elastic even when they share a common heating bill. Our results suggest that most households do not exploit the free-riding incentive, especially in smaller buildings. “Schmeduling,” inattention to the billing regime, and pro-social behavior can explain the low prevalence of free-riding. Nevertheless, submetering is welfare-improving for most buildings.

Suggested Citation

  • Harald Mayr & Mateus Souza, 2025. "The Tragedy of the Common Heating Bill," CRC TR 224 Discussion Paper Series crctr224_2025_629, University of Bonn and University of Mannheim, Germany.
  • Handle: RePEc:bon:boncrc:crctr224_2025_629
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp629
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    References listed on IDEAS

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    More about this item

    Keywords

    Free-riding; submetering; individual billing; heating energy; tragedy of the commons; welfare;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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