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Effects of Mandatory Energy Efficiency Disclosure in Housing Markets

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  • Erica Myers
  • Steven L. Puller
  • Jeremy D. West

Abstract

Mandatory disclosure policies are increasingly prevalent despite sparse evidence that they improve market outcomes. We study the effects of requiring home sellers to provide buyers with certified audits of residential energy efficiency. Using similar nearby homes as a comparison group, we find this requirement increases price capitalization of energy efficiency and encourages energy-saving residential investments. We present additional evidence characterizing the market failure as symmetrically incomplete information, which is ameliorated by government intervention. More generally, we formalize and provide empirical support for seller ignorance as a motivation for disclosure policies in markets with bilaterally incomplete information about quality.

Suggested Citation

  • Erica Myers & Steven L. Puller & Jeremy D. West, 2019. "Effects of Mandatory Energy Efficiency Disclosure in Housing Markets," NBER Working Papers 26436, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26436
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    1. Miyuki Hino & Marshall Burke, 2020. "Does Information About Climate Risk Affect Property Values?," NBER Working Papers 26807, National Bureau of Economic Research, Inc.
    2. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Schneider, Mark & Stephenson, Daniel Graydon, 2021. "Bargains, price signaling, and efficiency in markets with asymmetric information," Games and Economic Behavior, Elsevier, vol. 128(C), pages 160-181.
    4. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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