Split Incentives in Emerging Countries

Hector H. Sandoval and Pedro Hancevic
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Hector H. Sandoval: BEBR/University of Florida

No 242, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: In this paper we provide empirical evidence of the energy-efficiency gap between home-owners and renters and quantify the magnitude of the split incentives problem in an emerging economy by studying Mexican households. Using micro-level data from the first National Survey on Energy Consumption in Private Homes (ENCEVI-2018) and a regression framework, we show that underinvestment problems occur in multiple categories of residential energy efficiency. Concretely, our results show that renters have significantly less insulation and energy-efficient equipment, that they tend to use some of their equipment more frequently, and that they pay higher utility bills than homeowners. In addition, renters are less aware of government programs that can reduce their energy expenditure and are also less likely to take advantage of them. Finally, a substantial reduction in carbon emissions could be achieved if renters were equally energy efficient as homeowners.

Keywords: Split incentives; principal-agent problem; energy efficiency; Mexico (search for similar items in EconPapers)
JEL-codes: D12 Q15 Q40 Q53 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2023-05
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:aoz:wpaper:242

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