Testing eco-modulation policy incentives: Experimental evidence on extended producer responsibility

Erdmann, Maximilian Vincent and Walkowitz, Gari (2025): Testing eco-modulation policy incentives: Experimental evidence on extended producer responsibility.

Abstract

Extended producer responsibility (EPR) is an environmental policy strategy that aims to make producers responsible for the post-consumer stage of their products. Within this policy frame-work, different types of “eco-modulations” are discussed as alternative incentive strategies to the current basic fee by governmental institutions aiming to improve the sustainability of the eco-design of firms’ products. Using a large-scale behavioral experiment with industry profes-sionals (N = 377), we systematically examine, under controlled conditions, the effectiveness of different incentive strategies on product eco-design and weight, environmental outcomes, and regulator revenues, as well as the underlying psychological mechanisms driving decision-mak-ing. Our results demonstrate, for the first time in this field, that eco-modulations exert a direc-tional effect toward more sustainable eco-designs and a reduction of environmental externali-ties. In contrast, the current weight-based fee mainly incentivizes producers to reduce the weight of their products. Environmental values have a strong positive effect on eco-design choices; however, EPR policies induce a crowding-out effect, particularly among female par-ticipants. Further, we show that, despite being confronted with a revenue decline, eco-modula-tions appear to improve the cost efficiency of EPR institutions.

• Item Type: MPRA Paper
• Language: English
• Keywords: Extended producer responsibility, eco-modulations, eco-design, policy instruments, behavioral lab experiment
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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