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Do Energy Efficiency Standards Hurt Consumers? Evidence from Household Appliance Sales

Author

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  • Arlan Brucal
  • Michael Roberts

Abstract

How do energy efficiency standards affect consumer welfare? To answer this question the authors look at how these standards have affected the price and quality of major appliances – including washing machines, fridges, room air conditioners and clothes dryers – sold in the US between 2001 and 2011. Using a novel index that uses the same-model price changes of appliances to disentangle price changes from perceived quality changes, they derive welfare effects as functions of changes in price and quality as energy-efficiency standards became more stringent. Contrary to common belief, the authors find an indication that prices declined while quality and consumer welfare increased, especially when more stringent energy efficiency standards were enforced. They also find that much of the price decline is attributed to standards-induced innovation and not from competition between manufacturers. The results and technique generate methodological insights in accounting for quality adjustments in price indexing.

Suggested Citation

  • Arlan Brucal & Michael Roberts, 2017. "Do Energy Efficiency Standards Hurt Consumers? Evidence from Household Appliance Sales," GRI Working Papers 266, Grantham Research Institute on Climate Change and the Environment.
  • Handle: RePEc:lsg:lsgwps:wp266
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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