Environmental and Resource Economics

, Volume 52, Issue 2, pp 195–212 | Cite as

Instrument Choice and Motivation: Evidence from a Climate Change Experiment

Article

Abstract

Are prices or quantities the best regulatory instrument to align private actions with public interests in the presence of externalities? We add another dimension to this ongoing debate by experimentally analyzing the interaction between instrument choice and intrinsic motivation of regulated agents. The response of subjects facing a trade-off between real CO2 emissions and private monetary payoffs to both a price and a quantity instrument are tested. We find evidence that taxes crowd out intrinsic motivation while emission standards are neutral. Crowding is short term persistent and not well explained by established cognitive theories of motivational crowding.

Keywords

Instrument choice Motivation crowding Externalities 

JEL Classification

H23 H41 Q58 C91 

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Supplementary material

10640_2011_9524_MOESM1_ESM.pdf (70 kb)
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Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.Alfred-Weber-Institute, Department of EconomicsUniversity of HeidelbergHeidelbergGermany
  2. 2.School of Economics, CBESS and CSERGEUniversity of East AngliaNorwichUK

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