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Energy performance certificates and investments in building energy efficiency: a theoretical analysis

Pierre Fleckinger, Matthieu Glachant () and Paul-Hervé Tamokoué Kamga
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Pierre Fleckinger: MINES ParisTech and PSL University & Paris School of Economics
Paul-Hervé Tamokoué Kamga: MINES ParisTech and PSL University

No 2018/11, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: In the European Union, Energy Performance Certificates (EPCs) provide potential buyers or tenants with information on a property's energy performance. By mitigating informational asymmetries on real estate markets, the conventional wisdom is that they will reduce energy use, increase energy-efficiency investments, and improve social welfare. We develop a dynamic model that partly contradicts these predictions. Although EPCs always improve social welfare, their impact on energy use and investments is ambiguous. This implies that, in a second-best world where energy externalities are under-priced and/or homeowners have behavioral biases hindering investments (myopia), EPCs can damage social welfare. This calls for using mandatory energy labeling in contexts where additional instruments efficiently mitigate the other imperfections.

Keywords: Energy Labeling; Energy Efficiency; Buildings (search for similar items in EconPapers)
JEL-codes: Q48 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-reg and nep-ure
Date: 2018
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Working Paper: Energy performance certificates and investments in building energy efficiency: a theoretical analysis (2018)
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