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The Hidden Cost of Minimum Quality Standards: Evidence from the U.S. Clothes Washer Market

Author

Listed:
  • Sebastien Houde

    (HEC Lausanne, Department of Economics)

  • Tobias Wekhof

    (Center for Energy Policy and Economics at ETH Zurich)

Abstract

Minimum standard regulations for 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 due to a 2004 energy efficiency requirement. 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 were, however, compensated by energy-efficiency improvements.

Suggested Citation

  • Sebastien Houde & Tobias Wekhof, 2025. "The Hidden Cost of Minimum Quality Standards: Evidence from the U.S. Clothes Washer Market," CER-ETH Economics working paper series 25/400, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    • Handle: RePEc:eth:wpswif:25-400
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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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