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Does energy efficiency label alter consumersf purchase decision? A latent class approach on Shanghai data

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Author Info
Junyi Shen (OSIPP,Osaka University)
Tatsuyoshi Saijo (ISER,Osaka University)
Abstract

In this paper we apply hypothetical choice experiments through a field survey in Shanghai of China to examine whether China Energy Efficiency Label affects consumersf choices of air conditioner and refrigerator. A latent class approach is used to observe both heterogeneities among the respondents and product brands. The results suggest that the effect of energy efficiency label on consumersf preferences is twofold. First, more energy efficient air conditioners or refrigerators are preferred by consumers, no matter whether they are with foreign brands or domestic brands and whether they are new or second-hand. Second, energy efficiency label per se is recognized by consumers. In addition, presence of a (hypothetical) label that indicates the electricity billfs difference comparing to a standard model is significantly preferred by the respondents in most of the cases, suggesting that more information provided to consumers makes them much happier. Finally, the class probability weighted willingness to pay values for one rank upgrading in energy efficiency of refrigerator are higher than those of air conditioner, implying that consumers have an incentive to pay more for appliances used more frequently.

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Publisher Info
Paper provided by Osaka School of International Public Policy, Osaka University in its series OSIPP Discussion Paper with number 07E005.

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Length: 32 pages
Date of creation: May 2007
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Handle: RePEc:osp:wpaper:07e005

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Related research
Keywords: Energy efficiency label Consumersf purchase decision Latent class model Willingness to pay China

Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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  1. Cason, Timothy N. & Gangadharan, Lata, 2002. "Environmental Labeling and Incomplete Consumer Information in Laboratory Markets," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 113-134, January. [Downloadable!] (restricted)
    Other versions:
  2. Alpizar, Francisco & Carlsson, Fredrik & Martinsson, Peter, 2001. "Using Choice Experiments for Non-Market Valuation," Working Papers in Economics 52, Göteborg University, Department of Economics. [Downloadable!]
  3. Fisher-Vanden, Karen & Jefferson, Gary H. & Liu, Hongmei & Tao, Quan, 2004. "What is driving China's decline in energy intensity?," Resource and Energy Economics, Elsevier, vol. 26(1), pages 77-97, March. [Downloadable!] (restricted)
  4. Cesare Dosi & Michele Moretto, 2001. "Is Ecolabelling a Reliable Environmental Policy Measure?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 113-127, January. [Downloadable!] (restricted)
  5. Junyi Shen & Tatsuyoshi Saijo, 2007. "The Socioeconomic Determinants of Individual Environmental Concern: Evidence from Shanghai Data," OSIPP Discussion Paper 07E003, Osaka School of International Public Policy, Osaka University. [Downloadable!]
  6. B. Howarth, Richard & Haddad, Brent M. & Paton, Bruce, 2000. "The economics of energy efficiency: insights from voluntary participation programs," Energy Policy, Elsevier, vol. 28(6-7), pages 477-486, June. [Downloadable!] (restricted)
  7. Amacher, Gregory S. & Koskela, Erkki & Ollikainen, Markku, 2004. "Environmental quality competition and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 284-306, March. [Downloadable!] (restricted)
  8. Teisl, Mario F. & Roe, Brian & Hicks, Robert L., 2002. "Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 339-359, May. [Downloadable!] (restricted)
  9. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December. [Downloadable!] (restricted)
  10. Roe, Brian & Teisl, Mario F. & Levy, Alan & Russell, Matthew, 2001. "US consumers' willingness to pay for green electricity," Energy Policy, Elsevier, vol. 29(11), pages 917-925, September. [Downloadable!] (restricted)
  11. Banerjee, Abhijit & Solomon, Barry D., 2003. "Eco-labeling for energy efficiency and sustainability: a meta-evaluation of US programs," Energy Policy, Elsevier, vol. 31(2), pages 109-123, January. [Downloadable!] (restricted)
  12. Edward Morey & Jennifer Thacher & William Breffle, 2006. "Using Angler Characteristics and Attitudinal Data to Identify Environmental Preference Classes: A Latent-Class Model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 91-115, 05. [Downloadable!] (restricted)
  13. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470. [Downloadable!]
  14. Fredrik Carlsson & Peter Martinsson, 2003. "Design techniques for stated preference methods in health economics," Health Economics, John Wiley & Sons, Ltd., vol. 12(4), pages 281-294. [Downloadable!]
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