Willingness-to-Pay for Energy Conservation and Free-Ridership on Subsidization – Evidence from Germany

share of each craftsman’s labor required for a certain retrofit measure. The total
cost for one of the 16 retrofit combinations j is given as the sum among the
surface A_r of retrofitted components r from household i as follows:

local wage_ic

> ζc—------------------ * average-unit cost_r * Air,

_{r c} national aver. wage_c                      ^r

with subscript c denoting the category of craftsman and ζ_c representing the share
of craftsman c’s labor in the retrofit.¹³ While households are denoted by the
subscript i, the term “local wage_ic” captures the wage of craftsman c in i’s mu-
nicipality.

¹³We checked our estimates of the average-unit cost against other published estimates (e.g.
Jakob (2006) or Finanztest (2007)) and found the figures to be commensurate.

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