Avoiding catastrophic climate change: Heterogeneous abatement costs and voting on redistribution in a threshold public good experiment (with Matthias Greiff)
Journal of Economic Behavior & Organization 236, 107067, 2025.
| Publication (Open Access)|
Achieving the goal of limiting global warming is challenging, as it requires national contributions, whereas the benefits are shared between contributors and free-riders. We model this global climate problem as a collective-risk social dilemma (CRSD), a threshold public good game, and analyse the effectiveness of a frequently discussed instrument of global climate policy, namely climate-related transfers. Our CRSD experiment captures the incentive structure inherent in the social dilemma of global emission reductions, i.e., the heterogeneous distribution of wealth and marginal abatement costs (MAC). We find that introducing the option to vote on transfers for rich subjects increases the likelihood of reaching the threshold within the CRSD. A key mechanism is the shift of contributions from rich high-MAC subjects to poor low-MAC subjects, which reduces the costs of reaching the threshold. As a result, overall welfare is higher with redistribution and both rich and poor subjects benefit in terms of higher payoffs. Additional treatments show that the results are not driven by reciprocity or self-selection and that non-climate-related transfers may be similarly effective in increasing the likelihood of reaching the threshold, but less cost efficient. Our findings highlight the importance of climate-related transfers for limiting global warming at least cost to society.
The effect of exploiting the public good on climate cooperation: evidence from a collective-risk social dilemma experiment (with Janis Cloos and Matthias Greiff)
Environment, Development and Sustainability (in press), 2025.
| Publication (Open Access)|
Reaching ambitious climate targets is challenging, due the individual incentives of countries to free ride and to continue contributing to climate change. This issue of climate change has been analyzed in collective-risk social dilemma (CRSD) experiments, where participants interact in groups and can invest money in a group account over a fixed number of rounds. If the group account is below a threshold after the last round, the group members lose a large proportion of their assets. In the real world, however, agents can not only invest in public goods, but also exploit them. We argue that this possibility reduces the likelihood to reach the threshold. To test this prediction, we introduce the option to also exploit the public good in a CRSD experiment. The results reveal that a take option negatively affects the likelihood of reaching the threshold. Overall, the effect of the existence of a take option is rather small and not statistically significant. However, if participants exert their option to exploit the public good at the beginning, the success rate drops significantly. Consistent with the results of previous studies without the option of exploiting the public good, we find that a lower loss rate makes cooperation less likely, but the effect of heterogeneity is less clear. Our findings indicate that CRSD experiments that do not consider exploitation are likely to overestimate the likelihood of successful cooperation. The key implication for policy is to focus on reducing the incentives of the take option.
Climate and environmental impacts of green recovery: Evidence from the financial crisis (with Ashish Tyagi)
World Development Systainability 6, 100194, 2025.
| Publication (Open Access)|
While main goal of stimulus packages is to boost economic activity after a crisis, they may also affect environmental outcomes. The aim of this paper is to investigate whether incorporating green components into such packages affects the environment and to identify whether any effects are only temporary or affect countries’ trajectories towards a sustainable low-carbon economy. We compile a panel dataset covering 27 OECD countries from 2000–2019 to analyse green recovery packages launched in the aftermath of the 2008 financial crisis. Based in this dataset, we can investigate both short- and long-term impacts of green recovery packages on the climate, i.e., mitigation investments and greenhouse gas emissions, and the earth’s biocapacity. Using fixed effects estimation, we find that higher shares of green recovery spending induce lower CO2 emissions and a smaller ecological footprint of production. Employing a difference-in-differences framework, we provide evidence for a causal effect of recovery programmes dedicated to renewable energy on renewable energy investments. All these effects persist in the post-recovery periods. These findings stress that policymakers should consider the long-term impacts of post-crisis recovery programmes to ensure their consistency with the transition towards a sustainable climate-neutral economy.
Low-Carbon Investment and Credit Rationing (with Christian Haas)
Environmental and Resource Economics 86, 109-145, 2023.
| Publication (Open Access)|
This paper develops a principal-agent model with adverse selection to analyse firms’ decisions between an existing carbon-intensive technology and a new low-carbon technology requiring an externally funded initial investment. We find that a Pigouvian emission tax alone may result in credit rationing and under-investment in low-carbon technologies. Combining the Pigouvian tax with interest subsidies or loan guarantees resolves credit rationing and yields a first-best outcome. An emission tax set above the Pigouvian level can also resolve credit rationing and, in some cases, yields a first-best outcome. If a carbon price is (politically) not feasible, intervention on the credit market alone can promote low-carbon development. However, such a policy yields a second-best outcome. The issue of credit rationing is temporary if the risks of low-carbon technologies decline. However, there are social costs of delay if credit rationing is not addressed.
Dealing with deep uncertainty in the energy transition: What we can learn from the electricity and transportation sectors (with Christian Haas and Ulf Moslener)
Energy Policy 179, 113632, 2023.
| Publication|
The energy transition requires substantial investments. However, deep uncertainty – a situation where probabilities of outcomes and possibly the outcomes themselves are unknown – can deter investment in the energy transition. This is demonstrated based on three cases covering the sectors power generation and transportation: investment in (i) a coal-fired power plant, (ii) offshore wind, and (iii) electric vehicles. These cases illustrate key issues related to deep uncertainty: The interplay of multiple sources of uncertainty within highly complex investments can lead to deep uncertainty. Further, deep uncertainty related to policy and technologies delays and distorts investment decision-making. Based on the findings from the cases, we derive recommendations for policymakers. In the case of technology uncertainties, the policymaker can widely support technology alternatives or offer risk mitigating instruments to reduce firms’ costs of making the wrong decision. Supporting highly uncertain early-stage investments yields additional social benefits by reducing uncertainty for future investments due to learning effects. Overall, policymakers need to signal credible long-term commitment to the energy transition, particularly in those cases, where policy itself is a major source of uncertainty for firms and investors.
Deep uncertainty and the transition to a low-carbon economy (with Christian Haas, Henriette Jahns, and Ulf Moslener)
Energy Research & Social Science 100, 103060 , 2023.
| Publication (Open Access) |
The transformation of economies towards net zero greenhouse gas (GHG) emissions within very few decades will require substantial investments. However, the transition to a low-carbon economy exhibits a high degree of complexity and path dependency. Consequently, firms and investors systematically face deep uncertainty, a situation with no information about the probabilities of possible outcomes, where even the possible outcomes are not known. In this article, we present concepts and classifications of uncertainty and discuss potential sources of deep uncertainty for firms and investors, such as uncertainty about technology development and innovation, the behaviour of competitors, or climate-related policy development. Standard modelling-based decision support tools typically used by firms and investors are of limited value under deep uncertainty. Thus, deep uncertainty deters decision-making and delays low-carbon investment. This article addresses this issue by providing an overview of approaches for decision-making under deep uncertainty. We analyse their applicability for firms and investors and discuss what challenges they might face. Based on this analysis, we derive guidelines for policymakers to reduce deep uncertainty and support firms' decision-making under deep uncertainty.
Task-specific human capital and returns to specialization: evidence from association football
Oxford Economic Papers 74(1), 136-154, 2022.
| Publication | Free-access article link
This paper analyses returns to task specialization using a unique panel data set of professional football players in the German Bundesliga. Based on accumulated task-specific human capital, I measure whether a player is rather a specialist in one task or a generalist able to perform several tasks. Using OLS, fixed effects, and quantile regression methods (with individual fixed effects), I analyse the impact of specialization on remuneration. Differentiating by player role in team production, I find that core team members, i.e. starting players, exhibit positive returns to specialization, which increase at higher salary quantiles. In contrast, substitutes, in particular those in the lower half of the conditional salary distribution, seem to benefit from being generalists, which renders them more attractive as substitute players for their teams. The paper discusses implications of the findings for other labour market contexts.
The cost of debt of renewable and non-renewable energy firms (with Ulf Moslener and Oliver Schenker)
Nature Energy 6, 135-142, 2021.
| Publication | View-only Version (free access) | Nature "Behind the Paper" Post
The risks imminent to younger technologies and markets may hinder renewable energy firms’ access to financing. This could curtail the investment needed for the transformation of the global energy sector. However, comprehensive analyses of the cost of debt of renewable and non-renewable energy firms are lacking. Here, we empirically analyse the differences between the costs of debt of firms developing and producing renewable energy technologies and of non-renewable energy firms. We use global micro-level data on individual loans matched to firm-level data. The results suggest that renewable energy firms might face a higher cost of debt initially, when technologies and markets are young and immature. However, a cost advantage of renewable energy firms emerges over time. The results also show that the costs of debt of renewable energy firms are lower in economies with a more developed banking sector and comparatively stringent environmental policies.
The paper received the CCSI | GRASFI 2020 Best Paper Prize for Research on the Role of the State in Sustainable Fininance.
If a Measure Becomes a Target: How Maximizing Mobilized Private Climate Finance May Backfire (with Ulf Moslener) Zeitschrift für Umweltpolitik und Umweltrecht / Journal of Environmental Law and Policy 43(1), 26-40, 2020.
| Publication |
The developed country Parties to the UNFCCC collectively committed themselves tojointly mobilize USD 100 billion a year for climate-related activities by 2020 to address the needs of developing countries. The lack of a clear meaning of “mobilising” has triggered a vivid academic and political debate about the definition and measurement of mobilised private climate finance. On the one hand, there is a need for an adequate and practical system in order to monitor the developed countries’ progress to the commitment. On the other hand, the current debate shows how conceptually and practically challenging the tracking of mobilised private finance is. This article summarizes and discusses the current state of the debate on methodological approaches and first estimations. In particular, we critically assess the debate from a more fundamental perspective that did not receive sufficient attention, namely the incentives of all involved climate-finance actors: In order to achieve the “below-2°C” target, substantial investments are required worldwide. These investments will have to rely largely on private sources. We argue that incentives for private investments leading to a transition to a low-carbon economy should be a central aspect in the debate. We suggest that current incentives may be flawed and discuss options for practical tracking systems that include these incentives.
Reporting errors and biases in published empirical findings: Evidence from innovation research (with Stephan B. Bruns, Igor Asanov, Rasmus Bode, Melanie Dunger, Christoph Funk, Sherif M. Hassan, Julia Hauschildt, Dominik Heinisch, Johannes König, Johannes Lips, Matthias Verbeck, Eva Wolfschütz, and Guido Buenstorf)
Research Policy 48(9), 103796, 2019.
| Publication |
Errors and biases in published results compromise the reliability of empirical research, posing threats to the cumulative research process and to evidence-based decision making. We provide evidence on reporting errors and biases in innovation research. We find that 45% of the articles in our sample contain at least one result for which the provided statistical information is not consistent with reported significance levels. In 25% of the articles, at least one strong reporting error is diagnosed where a statistically non-significant finding becomes significant or vice versa using the common significance threshold of 0.1. The error rate at the test level is very small with 4.0% exhibiting any error and 1.4% showing strong errors. We also find systematically more marginally significant findings compared to marginally non-significant findings at the 0.05 and 0.1 thresholds of statistical significance. These discontinuities indicate the presence of reporting biases. Explorative analysis suggests that discontinuities are related to authors’ affiliations and to a lesser extent the article’s rank in the issue and the style of reporting.
Dissent, Sabotage, and Leader Behaviour in Contests: Evidence from European Football (with Hannes Rusch)
Managerial and Decision Economics 40(5), 500-514, 2019.
| Publication | PDF (Accepted Version) |
This paper provides an empirical investigation of misconducts in contests based on data from European football. We extend previous studies by differentiating between dissents with the referee and misconducts directly aimed at sabotaging the competitor. We find that sabotage is more likely committed by teams with lower ability. Dissent is more likely to be shown by teams lagging behind in score and by away teams. We further find that captains engage more in sabotage during important matches and challenge referees' decisions immediately after sanctions of teammates. Finally, we also observe a deterrence effect of sanctions on all types of misconduct.
Directed Technical Change and Energy Intensity Dynamics: Structural Change vs. Energy Efficiency (with Christian Haas)
Energy Journal 39(4), 127-151, 2018.
| Publication | PDF |
This paper uses a model with Directed Technical Change to theoretically analyse observable heterogeneous energy intensity developments. Based on the empirical evidence, we decompose changes in aggregate energy intensity into structural changes in the economy (structural effect) and within-sector energy efficiency improvements (efficiency effect). The relative importance of these effects is determined by energy price growth and sectoral productivities that drive the direction of technical change. When research is directed to the labour-intensive sector, the structural effect is the main driver of energy intensity dynamics. In contrast, the efficiency effect dominates energy intensity developments, when research is directed to energy-intensive industries. Increasing energy price generally leads to lower energy intensities and temporal energy price shocks might induce a permanent redirection of innovation activities. We calibrate the model to empirical data and simulate energy intensity developments across countries. The results of our very stylised model are largely consistent with empirical evidence.
Climate Policy with the Chequebook – An Economic Analysis of Climate Investment Support (with Ulf Moslener)
Economics of Energy & Environmental Policy 6(1), 111-129, 2017.
| Publication (Open Access) | PDF |
Across the globe, climate policy is increasingly using investment support instruments, such as grants, concessional loans, and guarantees - whereas carbon prices are losing importance. This development substantially increases the risk of inefficient public spending. In this paper, we examine the ability of finance instruments to effectively and efficiently address market failures related to clean energy investments. We characterise these market imperfections - emission externalities, knowledge spillovers and capital market imperfections - and identify their negative impacts on the investor-relevant risk-return characteristics. We argue that finance instruments are able to address the effects of these market failures. However, a carbon price is superior in internalising the emission externalities. With respect to the latter two inefficiencies, investment support instruments can effectively compensate the market failures if designed appropriately. We further provide policy recommendations on the choice of finance instruments to address the various market failures and guidance on how to use these instruments avoiding inefficient government spending.