The Power of Mandatory Quality Disclosure: Evidence from the German Housing Market

Manuel Frondel, Andreas Gerster and Colin Vance

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: To mitigate information asymmetry problems with respect to the thermal quality of houses, many countries have introduced Energy Performance Certificates (EPCs). Using big data on real estate advertisements that cover large parts of the German housing market, this paper empirically investigates the consequences of a shift from a voluntary to a mandatory quality disclosure regime on the offer prices of houses. Motivated by a stylized theoretical model, we test the following key hypothesis: Prices for houses whose owners would not voluntarily disclose their house’s energy consumption in real estate advertisements should decrease upon a shift to a mandatory disclosure scheme. Employing an instrumental variable approach to cope with the endogeneity of disclosure decisions, our analysis demonstrates the relative advantage of mandatory over voluntary disclosure rules.

JEL-codes: D82 L15 Q58 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ene, nep-eur, nep-law and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Power of Mandatory Quality Disclosure: Evidence from the German Housing Market (2020)
Working Paper: The power of mandatory quality disclosure: Evidence from the German housing market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc16:145815

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