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Policy Instruments Modelling



Welcome to the Homepage of the Policy Instruments Modelling group, a subunit of Research Domain III established in 2009. We study the role of policy instruments as incentives: how can individually rational behavior aimed at maximizing profits or utility lead to a socially efficient outcome - rather than a „market failure“? Our research is based on decentralized models (as opposed to social planner models) which allow an explicit representation of all agents‘ behavior. The following topics are addressed in our work:

  • carbon markets & finance
  • technology policy
  • low carbon development
  • international cooperation on climate change
  • carbon leakage

In terms of methodology, we make use of microeconomic formal analysis, numerical modeling, qualitative-institutional analysis, and econometric-statistical data analysis.


Kai Lessmann (group leader)

Ottmar Edenhofer

Max Franks

Beatriz Gaitan

Jobst Heitzig (RDIV, associated member)

Christina Roolfs

Dustin Schinn (external)

Adelya Churiakova 



Current Research Projects

Past Projects 

  • CREW (Climate Policy in a Reluctant World, BMBF Förderschwerpunkt "Ökonomie des Klimawandels"). Joint project with Marco Runkel (TU Berlin) and Roland Strausz (HU Berlin). Role of PI group: project lead.
  • ENTRACTE (Economic iNsTRuments to Achieve Climate Targets in Europe), project under EU FP7 ENV. Joint project coordinated by ZEW with various European partners, e.g. FEEMLSE Grantham Institute, FCO, Tilburg. Role of PI group: leader of Work Package 5, contributor to Work Package 2.
  • LIMITS (Low climate IMpact scenarios and the Implications of required Tight
    emission control Strategies), project under EU FP7 ENV. Joint project with various European partners, e.g. FEEM, IIASA, LSE Grantham Institute, ECN. Role of PI group: contribution to Work Package 2, in particular "Regional policies under second-best conditions".
  • EntDekEn (Klimaschutz, Entwicklung und Gerechtigkeit: Dekarbonisierung in Entwicklungs- und Schwellenländern), funded by BMBF. Joint project with the GIGA institute and the Chair of Development Economics at University of Göttingen. Role of PI group: project lead.
  •  Ökonomik einer integrierten und langfristigen Klima- und Energiepolitik (WGL Pakt für Forschung und Innovation 2010). Joint project with Environmental Economics group of ZEW Mannheim. Role of PI group: contributing partner.



Group Activities


  • MICA: a model of international cooperation on climate change
  • PRIDE: a model for finding first and second best policies in the presence of strategic interactions of multiple actors

Former Group Members

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