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Asymmetric information on the market for energy efficiency: Insights from the credence goods literature

Bruno Lanz and Evert Reins

No 19-03, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: Imperfect information is widely acknowledged to hamper the adoption of energy efficient technologies. In this paper, we study supply-side implications of the associated incentive structure. We build on existing evidence suggesting that energy efficiency owns a credence component, whereby the supply side of the market has more information about what technology is best for consumers. The literature on credence goods markets suggests that informational advantage by an expert-seller leads to market inefficiencies, including low trade volume. We start by developing a simple framework to study supply-side incentives related to the provision of energy efficient technologies. We then document inefficiencies and potential remedies by discussing linkages between an empirical literature on credence goods and that on the market for energy efficiency. Doing so, we identify policy implications and research gaps that are relevant for the adoption of energy efficiency technologies.

Keywords: Energy efficiency; Asymmetric information; Credence goods; Energy policy; Environmental externalities; Technology adoption. (search for similar items in EconPapers)
JEL-codes: D18 D82 H23 Q41 (search for similar items in EconPapers)
Pages: 25 pages.
Date: 2019-05
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Asymmetric Information on the Market for Energy Efficiency: Insights from the Credence Goods Literature (2021) Downloads
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