Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74383
Authors: 
Dieckhoener, Caroline
Hecking, Harald
Year of Publication: 
2012
Series/Report no.: 
EWI Working Paper 12/16
Abstract: 
In this paper, we develop a microeconomic approach to deduce greenhouse gas abatement cost curves of the residential heating sector. By accounting for household behavior, we find that welfare-based abatement costs are generally higher than pure technical equipment costs. Our results are based on a microsimulation of private households' investment decision for heating systems until 2030. The households' investment behavior in the simulation is derived from a discrete choice estimation which allows investigating the welfare costs of different abatement policies in terms of the compensating variation and the excess burden. We simulate greenhouse gas abatements and welfare costs of carbon taxes and subsidies on heating system investments until 2030 to deduce abatement curves. Given utility maximizing households, our results suggest a carbon tax to be the welfare efficient policy. Assuming behavioral misperceptions instead, a subsidy on investments might have lower marginal greenhouse gas abatement costs than a carbon tax.
Subjects: 
Household behavior
discrete choice
Pigou
greenhouse gas abatement costs
JEL: 
C35
C61
Q47
Q53
R21
Document Type: 
Working Paper

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