This project is concerned with the efficient allocation of subsidies for eco-friendly products. Examples include subsidies for cargo or e-bikes, electric cars, and energy efficient building retrofits. Conceptually related subsidies exist also in the business world such as wage subsidies for firms who hire unemployed workers, sales promotions in the form of discounts or allowances, or vehicle scrappage programs.

Inefficiencies arise when subsidies are allocated to consumers who would have bought eco-friendly products even without subsidies (inframarginal consumers). This crowds out consumers who buy eco-friendly products only when they are subsidised (marginal consumers).

With the financial support of the ZEW Sponsors’ Association and in cooperation with cities in the region, the project investigates mechanisms that exploit the relative impatience of inframarginal consumers in order to increase the share of marginal consumers receiving the subsidy – thus increasing the overall efficiency of the subsidy – by lengthening the time between consumer subsidy application and subsidy receipt.