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Appliance labeling and consumer heterogeneity: A discrete choice experiment in India

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  • Jain, Manisha
  • Rao, Anand B.
  • Patwardhan, Anand

Abstract

Appliance labels are a widely used policy instrument to increase the adoption of energy-efficient technologies. Most countries use categorical labels to facilitate comparison of appliances based on energy consumption. Studies have found that consumers respond positively to the labels, but the differentiated response to the categories on labels is not well understood in the literature. This study presents the results of a discrete choice experiment corroborated by an analysis of secondary market data to demonstrate that consumers differentiate between label categories; with a greater value being placed on appliances with higher levels of energy efficiency performance. We examine two appliances - air conditioners and refrigerators and observe that there are some differences in consumer response - likely due to the different usage patterns of the two appliances. Consumer responses were observed in hypothetical choice situations constructed ensuring statistical and design efficiency. In a mixed logit model specification with correlated random parameters, the magnitude and the distribution of consumer preference for the highest category of energy efficiency are estimated. The results are validated by estimating the incremental price of higher category of energy efficiency using market data for comparison. The sources of consumer heterogeneity for the highest category of energy efficiency are identified after controlling for other consumer variables. The findings presented in this paper are useful for improving the effectiveness of existing energy efficiency programs and designing new programs to accelerate adoption of energy efficient technologies.

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  • Jain, Manisha & Rao, Anand B. & Patwardhan, Anand, 2018. "Appliance labeling and consumer heterogeneity: A discrete choice experiment in India," Applied Energy, Elsevier, vol. 226(C), pages 213-224.
    • Handle: RePEc:eee:appene:v:226:y:2018:i:c:p:213-224
    DOI: 10.1016/j.apenergy.2018.05.089
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    2. Huh, Sung-Yoon & Jo, Manseok & Shin, Jungwoo & Yoo, Seung-Hoon, 2019. "Impact of rebate program for energy-efficient household appliances on consumer purchasing decisions: The case of electric rice cookers in South Korea," Energy Policy, Elsevier, vol. 129(C), pages 1394-1403.
    3. Mahirah Kamaludin & Muhd Azrin Shah Razali & Nazatul Faizah Haron & A. A. Azlina, 2021. "Energy Efficiency Labelling: Investigating Students Preferences and Awareness on the Energy-efficient Electrical Appliances in Hostel," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 300-308.
    4. Zha, Donglan & Yang, Guanglei & Wang, Wenzhong & Wang, Qunwei & Zhou, Dequn, 2020. "Appliance energy labels and consumer heterogeneity: A latent class approach based on a discrete choice experiment in China," Energy Economics, Elsevier, vol. 90(C).
    5. Agyarko, Kofi A. & Opoku, Richard & Van Buskirk, Robert, 2020. "Removing barriers and promoting demand-side energy efficiency in households in Sub-Saharan Africa: A case study in Ghana," Energy Policy, Elsevier, vol. 137(C).
    6. Muhammad Azrin Shah Razali & Mahirah Kamaludin & A.A. Azlina, 2022. "Consumer Preference for Energy Label in the Purchase Decision of Refrigerator: A Discrete Choice Experiment Approach in the East Coast, Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 441-450, May.
    7. Zhang, Yixiang & Li, Juan & Tao, Wenwen, 2021. "Does energy efficiency affect appliance prices? Empirical analysis of air conditioners in China based on propensity score matching," Energy Economics, Elsevier, vol. 101(C).
    8. Yoo, Sunbin & Kumagai, Junya & Kawabata, Yuta & Keeley, Alexander & Managi, Shunsuke, 2021. "Willingness to Buy and/or Pay Disparity: Evidence from Fully Autonomous Vehicles," MPRA Paper 108882, University Library of Munich, Germany.
    9. Makiko Nakano, 2023. "Examining Preference for Energy-Related Information through a Choice Experiment," Energies, MDPI, vol. 16(5), pages 1-15, March.
    10. Amaia de Ayala & María del Mar Solà, 2022. "Assessing the EU Energy Efficiency Label for Appliances: Issues, Potential Improvements and Challenges," Energies, MDPI, vol. 15(12), pages 1-25, June.

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