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A new rationale for not picking low hanging fruits: The separation of ownership and control

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  • Denis Claude

    (LEDi - Laboratoire d'Economie de Dijon [Dijon] - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE])

  • Mabel Tidball

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

Recent attempts at explaining the energy-efficiency gap rely on considerations related to organizational and behavioral/cognitive failures. In this paper, we build on the strategic delegation literature to advance a complementary explanation. It is shown that strategic market interaction may encourage business owners to instill a bias against energy efficiency in managerial compensation contracts. Since managers respond to financial incentives, their decisions will reflect this bias, resulting in lack of investment.

Suggested Citation

  • Denis Claude & Mabel Tidball, 2019. "A new rationale for not picking low hanging fruits: The separation of ownership and control," CEE-M Working Papers hal-02316599, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    • Handle: RePEc:hal:wpceem:hal-02316599
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-02316599
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    References listed on IDEAS

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    Keywords

    energy efficiency; strategic delegation; behavioral bias; energy paradox;
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