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The Hidden Cost of Minimum Energy Efficiency Standards

Author

Listed:
  • Sébastien Houde
  • Tobias Wekhof

Abstract

Minimum standard regulations for energy-using durables have long been suspected of having hidden costs: quality improvements in the regulated dimension reduce quality in other dimensions. We substantiate this claim for the U.S. clothes washer market, which has become a notorious example of the hidden cost phenomenon. We find that overall quality increased from 2001 to 2011, and these gains were primarily driven by improvements in energy efficiency. Quality in the non-energy dimensions declined or remained constant after the major standard change. These hidden costs, however, were quickly offset by energy-efficiency improvements in the new models.

Suggested Citation

  • Sébastien Houde & Tobias Wekhof, 2026. "The Hidden Cost of Minimum Energy Efficiency Standards," CESifo Working Paper Series 12447, CESifo.
    • Handle: RePEc:ces:ceswps:_12447
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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