Should energy efficiency be traded off for other product attributes?: an analysis of air-conditioner regulation in Japan

Kubo Kensuke, Mariko Watanabe and Kojima Michikazu

No 607, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper examines the functioning of energy efficiency standards and labeling policies for air conditioners in Japan. The results of our empirical analysis suggest that consumers respond more to label information, which benchmarks the energy efficiency performance of each product to a pre-specified target, than to direct performance measures. This finding provides justification for the setting, and regular updating, of target standards as well as their use in calculating relative performance measures. We also find, through graphical analysis, that air conditioner manufacturers face a tradeoff between energy efficiency and product compactness when they develop their products. This tradeoff, combined with the semi-regular upward revision of minimum energy efficiency standards, has led to the growth in indoor unit size of air conditioners in recent years. In the face of this phenomenon, regulatory rules were revised so that manufacturers could adhere to less stringent standards if the indoor unit size of their product remains below a certain size. Our demand estimates provide no evidence that larger indoor unit size causes disutility to consumers. It is therefore possible that the regulatory change was not warranted from a consumer welfare point of view.

Keywords: Energy policy; Energy; Energy efficiency standard and labeling; Promotion policies (search for similar items in EconPapers)
JEL-codes: F15 O14 O30 (search for similar items in EconPapers)
Date: 2016-06-01
New Economics Papers: this item is included in nep-ene
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 607. 2016-06-01

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