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Consumer myopia, imperfect competition and the energy efficiency gap: evidence from the UK refrigerator market

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  • Cohen, François
  • Glachant, Matthieu
  • Söderberg, Magnus

Abstract

The empirical literature on the energy efficiency gap concentrates on demand inefficiencies in the energy-using durables markets and finds evidence that consumers underestimate future energy costs when purchasing a new appliance. We take a broader view and also consider the impact of imperfect competition. Using data on the UK refrigerator market (2002-2007), we find that the average energy consumption of appliances sold during this period was only 7.2% higher than what would have been observed under a scenario with a perfectly competitive market and non-myopic consumers. One reason for this small gap is that market power actually reduces energy use.

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  • Cohen, François & Glachant, Matthieu & Söderberg, Magnus, 2017. "Consumer myopia, imperfect competition and the energy efficiency gap: evidence from the UK refrigerator market," LSE Research Online Documents on Economics 69188, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:69188
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    Cited by:

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    4. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2019. "A large-scale test of the effects of time discounting, risk aversion, loss aversion, and present bias on household adoption of energy-efficient technologies," Energy Economics, Elsevier, vol. 80(C), pages 377-393.
    5. Cohen, François & Glachant, Matthieu & Söderberg, Magnus, 2017. "The impact of energy prices on product innovation: Evidence from the UK refrigerator market," Energy Economics, Elsevier, vol. 68(S1), pages 81-88.
    6. Huaccha, Gissell, 2023. "Regional persistence of the energy efficiency gap: Evidence from England and Wales," Energy Economics, Elsevier, vol. 127(PA).
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    8. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Policy Papers 2018.04, FAERE - French Association of Environmental and Resource Economists.
    9. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
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    16. Schleich, Joachim, 2019. "Energy efficient technology adoption in low-income households in the European Union – What is the evidence?," Energy Policy, Elsevier, vol. 125(C), pages 196-206.
    17. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    18. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2023. "Making the factors underlying the implicit discount rate tangible," Energy Policy, Elsevier, vol. 177(C).
    19. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
    20. Goeschl, Timo, 2019. "Cold Case: The forensic economics of energy efficiency labels for domestic refrigeration appliances," Energy Economics, Elsevier, vol. 84(S1).
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    More about this item

    Keywords

    Energy Efficiency; Electricity Prices; Consumer Myopia; Imperfect Competition;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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