Inefficiencies in Residential Use of Energy — A Critical Overview of Literature and Energy Efficiency Policies in the EU

Thomas Broberg and Andrius Kazukauskas

International Review of Environmental and Resource Economics, 2015, vol. 8, issue 2, 225-279

Abstract: A rather large literature argues that firms and households do not always improve energy efficiency by investing in new technology even if it would be cost-effective to do so. In this paper, we review the theoretical and empirical literature on the so-called energy efficiency gap and provide a rationale for policymakers to act to improve energy efficiency. By eliminating market failures, welfare can be improved in a broad sense, including both environmental quality and material welfare. We also discuss social 'nudges' as examples of policy instruments that do not directly target any market failure in energy markets but that still may have a significant impact on energy use. Although we acknowledge the existence of the energy efficiency gap, we argue that the gap in general is overestimated as parts of it can be explained by heterogeneity in preferences and thus explained by rational choices.

Keywords: Energy efficiency gap; Market failures; Behavioural failures; EU policies (search for similar items in EconPapers)
JEL-codes: Q38 Q41 Q48 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://dx.doi.org/10.1561/101.00000070 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jirere:101.00000070

Access Statistics for this article

More articles in International Review of Environmental and Resource Economics from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().