The Welfare Effects of Energy Efficiency Standards When Choice Sets Matter

Tsvetan Tsvetanov and Kathleen Segerson ()

Journal of the Association of Environmental and Resource Economists, 2014, vol. 1, issue 1, 233 - 271

Abstract: Existing studies point out various factors that might contribute to an "energy efficiency gap" but do not consider the potential effect of choice sets on behavior. In an earlier paper, we developed a theoretical model of the purchase of energy-using durables in which the choice set matters if consumers face price-driven temptation and self-control costs. In this paper, we use refrigerator market data to illustrate that, under such a preference structure, energy efficiency standards can have larger overall welfare benefits than previously recognized, suggesting the importance of considering choice sets in welfare analyses of standards.

Date: 2014
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