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On Dynamic Standards for Energy Efficiency in Differentiated Duopoly

Author

Listed:
  • Peter Michaelis
  • Thomas Ziesemer

Abstract

We consider a two-period model of differentiated duopoly. Firms produce an energy-consuming good differentiated by its energy efficiency. Consumers differ by the weight they apply to energy costs when deciding which product to buy. In line with the Japanese Top Runner Program, the regulator introduces a minimum efficiency standard in period t=2, which is fixed according to the efficiency of the product supplied by the high-efficiency firm in t=1. We show that total energy consumption is decreasing, but the effect on welfare is ambiguous. It depends on the discount rate and the minimum weight consumers apply to energy costs.

Suggested Citation

  • Peter Michaelis & Thomas Ziesemer, 2017. "On Dynamic Standards for Energy Efficiency in Differentiated Duopoly," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 173(4), pages 618-642, December.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201712)173:4_618:odsfee_2.0.tx_2-a
    DOI: 10.1628/093245617X14852393231705
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    Cited by:

    1. Peter Michaelis & Thomas Ziesemer, 2022. "Minimum quality standards and benchmarking in differentiated duopoly," The Japanese Economic Review, Springer, vol. 73(3), pages 515-537, July.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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