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The long-term impact of matching and rebate subsidies when public goods are impure: Field experimental evidence from the carbon offsetting market

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  • Kesternich, Martin
  • Löschel, Andreas
  • Römer, Daniel

Abstract

In this paper, we investigate both short- and long-term impacts of financial stimuli on public goods provision when contributions are tied to individual harm-related behavior. We conduct a large-scaled field experiment to examine voluntary contributions to a carbon offsetting program during the online purchase of a bus ticket. We systematically vary the individual payoff structure by introducing different matching grants (1/3:1, 1:1, 3:1) and price rebates (r-25%, r-50%, r-75%). Our results show that price rebates are more effective than matching schemes in raising participation rates while matching grants induce higher contributions to the offsetting program. We suspect differences in the personal responsibility for the compensated emissions to drive this result. Analyzing repeated bookings, we find decreasing treatment effects for returning customers except for the case of 1:1 matching grants. The equal matching scheme is also the only intervention that increases net contributions of customers compared to the control group.

Suggested Citation

  • Kesternich, Martin & Löschel, Andreas & Römer, Daniel, 2014. "The long-term impact of matching and rebate subsidies when public goods are impure: Field experimental evidence from the carbon offsetting market," CAWM Discussion Papers 76, University of Münster, Center of Applied Economic Research Münster (CAWM).
    • Handle: RePEc:zbw:cawmdp:76
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    1. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-017-0126-7 is not listed on IDEAS
    2. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-017-0162-3 is not listed on IDEAS
    3. Felgendreher, Simon, 2018. "Do consumers choose to stay ignorant? The role of information in the purchase of ethically certified products," Working Papers in Economics 717, University of Gothenburg, Department of Economics.
    4. Kesternich, Martin & Römer, Daniel & Flues, Florens, 2016. "The power of active choice: Field experimental evidence on repeated contribution decisions to a carbon offsetting program," ZEW Discussion Papers 16-091, ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung GmbH Mannheim / Leibniz Centre for European Economic Research.
    5. Daniel M. Hungerman & Mark Ottoni-Wilhelm, 2018. "Impure Impact Giving: Theory and Evidence," Working Papers id:12906, eSocialSciences.
    6. Lohse, Johannes, 2015. "Cooperation at a discount - Will I give away your money?," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113151, Verein für Socialpolitik / German Economic Association.
    7. Schwirplies, Claudia & Dütschke, Elisabeth & Schleich, Joachim & Ziegler, Andreas, 2017. "Consumers' willingness to offset their CO2 emissions from traveling: A discrete choice analysis of framing and provider contributions," Working Papers "Sustainability and Innovation" S05/2017, Fraunhofer Institute for Systems and Innovation Research (ISI).
    8. Baranzini, Andrea & Borzykowski, Nicolas & Carattini, Stefano, 2018. "Carbon offsets out of the woods? Acceptability of domestic vs. international reforestation programmes in the lab," Journal of Forest Economics, Elsevier, vol. 32(C), pages 1-12.

    More about this item

    Keywords

    voluntary carbon offsets; randomized field experiment; public goods; rebate subsidy; matching subsidy;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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