Application
Environmental subsidies
How subsidy programmes for eco-friendly products can better reach households that would not buy without support.
Less windfall
funds go less often to households that would have bought anyway
Waiting as a filter
without verifying income or intentions
More impact
per euro spent, with the same budget
Starting point
The problem
Governments subsidise cargo bikes, e-bikes, electric cars and energy-efficient retrofits. Part of the money goes to households that would have bought anyway, crowding out those who buy only when subsidised.
Approach
The solution
Households that would buy anyway tend to be more impatient and reluctant to wait for approval. A longer time between application and payment therefore shifts funds towards households whose purchase actually depends on the subsidy.
The approach
- Apply. Households apply for the subsidy as before.
- Set the waiting time. A waiting time separates application and payment; a uniform wait-time auction sets it so that as many households as possible are reached who buy only with support.
- Self-selection. Those who would buy anyway often buy right away without the subsidy. The funds remain for the households for whom they make the difference.
Project
2023–2024
Tapping into people’s impatience for better environmental subsidies
Research on mechanisms that use households’ impatience to make subsidy programmes better targeted.
Materials
Policy brief
Tapping into People’s Impatience for Better Environmental Subsidies
How waiting times raise the efficiency of subsidy programmes.
Practitioner article
Mit Ungeduld zu besseren Subventionen für umweltfreundliche Produkte
The approach applied to German subsidy practice.
Publications
Show list
- 2
- 1
Planning a subsidy programme?
I am happy to discuss how waiting times and selection rules could work for your programme.