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Consumer myopia, imperfect competition and the energy efficiency gap: Evidence from the UK refrigerator market

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  • François Cohen

    (CERNA i3 - Centre d'économie industrielle i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

  • Matthieu Glachant

    () (CERNA i3 - Centre d'économie industrielle i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

  • Magnus Söderberg

    () (NIVA - Norwegian Institute for Water Research)

Abstract

The empirical literature on the energy efficiency gap concentrates on demand inefficiencies in the energy-using durables markets and finds evidence that consumers underestimate future energy costs when purchasing a new appliance. We take a broader view and also consider the impact of imperfect competition. Using data on the UK refrigerator market (2002–2007), we find that the average energy consumption of appliances sold during this period was only 7.2% higher than what would have been observed under a scenario with a perfectly competitive market and non-myopic consumers. One reason for this small gap is that market power actually reduces energy use.
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Suggested Citation

  • François Cohen & Matthieu Glachant & Magnus Söderberg, 2017. "Consumer myopia, imperfect competition and the energy efficiency gap: Evidence from the UK refrigerator market," Post-Print hal-01693866, HAL.
  • Handle: RePEc:hal:journl:hal-01693866
    DOI: 10.1016/j.euroecorev.2017.01.004
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01693866
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    Cited by:

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    2. Cohen, François & Glachant, Matthieu & Söderberg, Magnus, 2017. "The impact of energy prices on product innovation: Evidence from the UK refrigerator market," Energy Economics, Elsevier, vol. 68(S1), pages 81-88.
    3. repec:cty:dpaper:(18/06 is not listed on IDEAS
    4. Schleich, Joachim & Faure, Corinne & Meissner, Thomas, 2019. "Adoption of retrofit measures among home-owners in EU countries: The effects of access to capital and debt aversion," Working Papers "Sustainability and Innovation" S08/2019, Fraunhofer Institute for Systems and Innovation Research (ISI).
    5. Hans R. A. Koster & Edward W. Pinchbeck, 2018. "How do Households Value the Future? Evidence from Property Taxes," CEP Discussion Papers dp1571, Centre for Economic Performance, LSE.
    6. Bjerregaard, Casper & Møller, Niels Framroze, 2019. "The impact of EU's energy labeling policy: An econometric analysis of increased transparency in the market for cold appliances in Denmark," Energy Policy, Elsevier, vol. 128(C), pages 891-899.
    7. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Working Papers 2018.07, FAERE - French Association of Environmental and Resource Economists.
    8. Schleich, Joachim & Faure, Corinne & Gassmann, Xavier, 2017. "Household electricity contract and provider switching in the EU," Working Papers "Sustainability and Innovation" S14/2017, Fraunhofer Institute for Systems and Innovation Research (ISI).
    9. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
    10. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2019. "A large-scale test of the effects of time discounting, risk aversion, loss aversion, and present bias on household adoption of energy-efficient technologies," Energy Economics, Elsevier, vol. 80(C), pages 377-393.
    11. Goeschl, Timo, 2019. "Cold Case: The forensic economics of energy efficiency labels for domestic refrigeration appliances," Energy Economics, Elsevier, vol. 84(S1).
    12. Schleich, Joachim, 2019. "Energy efficient technology adoption in low-income households in the European Union – What is the evidence?," Energy Policy, Elsevier, vol. 125(C), pages 196-206.
    13. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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