Split Incentives in Residential Energy Consumption
We explore two split incentive issues between owners and occupants of residential dwellings: heating or cooling incentives are suboptimal when the occupant does not pay for energy use, and insulation incentives are suboptimal when the occupant cannot perfectly observe the owner's insulation choice. We empirically quantify the effect of these two market failures and how they affect behavior in California. We find that those who pay are 16 percent more likely to change the heating setting at night and owner-occupied dwellings are 20 percent more likely to be insulated in the attic or ceiling. However, in contrast to common conception, we find that only small overall energy savings may be possible from policy interventions aimed at correcting the split incentive issues.
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Volume (Year): Volume 33 (2012)
Issue (Month): Number 2 ()
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sanford Grossman & Oliver Hart, .
"Corporate Financial Structure and Managerial Incentives,"
Rodney L. White Center for Financial Research Working Papers
21-79, Wharton School Rodney L. White Center for Financial Research.
- Sanford J. Grossman & Oliver D. Hart, 1982. "Corporate Financial Structure and Managerial Incentives," NBER Chapters, in: The Economics of Information and Uncertainty, pages 107-140 National Bureau of Economic Research, Inc.
- Blumstein, Carl & Krieg, Betsy & Schipper, Lee & York, Carl, 1980. "Overcoming social and institutional barriers to energy conservation," Energy, Elsevier, vol. 5(4), pages 355-371.
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