On Dynamic Standards for Energy Efficiency in Differentiated Duopoly

Peter Michaelis and Thomas Ziesemer

Journal of Institutional and Theoretical Economics (JITE), 2017, vol. 173, issue 4, 618-642

Abstract: We consider a two-period model of differentiated duopoly. Firms produce an energy-consuming good differentiated by its energy efficiency. Consumers differ by the weight they apply to energy costs when deciding which product to buy. In line with the Japanese Top Runner Program, the regulator introduces a minimum efficiency standard in period t=2, which is fixed according to the efficiency of the product supplied by the high-efficiency firm in t=1. We show that total energy consumption is decreasing, but the effect on welfare is ambiguous. It depends on the discount rate and the minimum weight consumers apply to energy costs.

JEL-codes: L13 Q48 Q58 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1628/093245617X14852393231705

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