Demand-Side Technology Standards Under Inefficient Pricing Regimes

Christopher Timmins ()

Environmental & Resource Economics, 2003, vol. 26, issue 1, 107-124

Abstract: When price-setting regulators haveobjectives other than maximizing socialsurplus, the conservation potential ofdemand-side technology standards can besignificantly diminished. This paperdemonstrates this by empirically recovering thesocially sub-optimal preferences of a group ofwater managers in a groundwater-dependentregion of California and simulating theirinefficient price response to the mandatedadoption of low-flow appliances by homeowners. The resulting reduction in the conservationpotential of these appliances is quantified,and a modest tax is shown to be a relativelycost-effective policy tool for conservation. If non-price conservation policies arepreferred according to equity criteria, thepaper suggests that, in order to preserve theirconservation potential, policy-makers should berequired to continue to set prices as if notechnology standards had been introduced. Copyright Kluwer Academic Publishers 2003

Keywords: demand-side technology standard; dynamic programming problem; efficient pricing; groundwater (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (12)

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DOI: 10.1023/A:1025689706396

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