An economic analysis of the “Home Appliance Eco-Point System” in Japan

Ken-Ichi Akao

Environmental Economics and Policy Studies, 2017, vol. 19, issue 3, No 3, 483-501

Abstract: Abstract The Home Appliance Eco-Point System was a subsidy program implemented by the Japanese government from May 2009 to March 2011. The system has two features. First, the subsidy was provided in the form of eco-points that were only exchangeable for environmentally friendly goods. Second, it was a replacement subsidy program for durable goods with uncertain termination dates. We investigate the policy implications of these features. We show that if the eco-points are exchangeable for any goods (i.e., if a simple rebate program rather than an eco-point system is implemented), the same outcome can be achieved at a lower subsidy rate and thus using fewer financial resources. Regarding the eco-point system as a replacement subsidy, we show that the uncertain termination has the same effect as an increase in the subsidy: both accelerate the replacement. Uncertainty is a substitute for a subsidy, thus saving the financial resources of the government. However, there are two welfare concerns: (a) acceleration may not be desirable in terms of the environment, and (b) it costs households their expected utility.

Keywords: Eco-point; Environmentally friendly goods; Voucher; Replacement subsidy; Uncertain termination (search for similar items in EconPapers)
JEL-codes: H23 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10018-016-0156-3

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