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Public economics

Climate policy

Political communication

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Selected Publications

Pinna, Matteo, Picard, Léo, & Goessmann, Christoph. (2022). Cable news and COVID-19 vaccine uptake. Scientific Reports, 12(1), 16804. https://doi.org/10.1038/s41598-022-20350-0

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Selected Projects & Collaborations

Cost-effectiveness of Emissions Trading Schemes

Research Project | 3 Project Members

The use of price instruments is often advocated by economists, based on their ability to bring about marginal abatement cost equalisation, and hence to achieve targets at least cost. We use the EU ETS as a case study and test this theoretical prediction. We parametrically estimate separate enhanced hyperbolic distance functions for various industries of the German manufacturing sector and are therefore able to compute the shadow value of CO2 emissions. We are the first to provide firm-level estimates of the marginal cost of CO2 emissions using confidential administrative data for German manufacturing firms between 2005 and 2014. This allows for an unprecedented insight into the cost of the EU flagship climate policy for manufacturing firms. We are able to describe the evolution of the abatement costs over time and across industries, tracking the impact of changes in the policy design and its stringency on the behaviour of the firms in our panel. Our findings provide valuable information for policy makers in the European Union and beyond on the actual level of the costs imposed by climate change policy, and its distributional impacts across firms and industries.

The impact of the EU ETS on productivity and markups

Research Project | 3 Project Members

We investigate productivity and cost pass-through of German manufacturing firms using administrative data from 2001 to 2014. Our framework allows for the estimation of quantity-based production functions for multi-product firms while controlling for unobserved productivity shocks and unobserved input quality. Using our parameter estimates, we can compute total factor productivity, markups and marginal costs. We find no effect of the EU ETS on firm productivity or profits for the whole sector, and a positive effect for some industries. Firms pass on shocks to materials costs completely, or even more than completely, whereas pass-through of energy costs is around 35-60%. Although pass-through of energy costs is incomplete, it nevertheless allowed firms to recover more than their total carbon costs due to generous free allocation of allowances. Our results add to the recent literature concerning the causal effects of climate policy on firms and are relevant for policy makers when defining the level of free allowance allocation to industry.