How Consumers Respond to Environmental Certification and the Value of Energy Information

Sébastien Houde

No 20019, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The ENERGY STAR certification is a voluntary labeling that favors the adoption of energy efficient products. In the US appliance market, the label is a coarse summary of otherwise readily accessible information. Using micro-data of the US refrigerator market, I develop a structural demand model and find that consumers respond to certification in different ways. Some consumers have a large willingness to pay for the label, well beyond the energy savings associated with certified products; others appear to pay attention to electricity costs, but not to the certification, and still others appear to be insensitive to both electricity costs and ENERGY STAR. The findings suggest that the certification acts as a substitute for more accurate, but complex energy information. Using the structural model, I find that the opportunity cost of having imperfectly informed consumers in the refrigerator market ranges from $12 to $17 per refrigerator sold.

JEL-codes: D12 D83 L15 Q41 Q50 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-ene, nep-env and nep-ger
Note: EEE IO
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Citations: View citations in EconPapers (39)

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