How Consumers Respond to Environmental Certification and the Value of Energy Information
The ENERGY STAR certification is a voluntary labeling that favors the adoption of energy efficient products. In the US appliance market, the label is a coarse summary of otherwise readily accessible information. Using micro-data of the US refrigerator market, I develop a structural demand model and find that consumers respond to certification in different ways. Some consumers have a large willingness to pay for the label, well beyond the energy savings associated with certified products; others appear to pay attention to electricity costs, but not to the certification, and still others appear to be insensitive to both electricity costs and ENERGY STAR. The findings suggest that the certification acts as a substitute for more accurate, but complex energy information. Using the structural model, I find that the opportunity cost of having imperfectly informed consumers in the refrigerator market ranges from $12 to $17 per refrigerator sold.
|Date of creation:||Mar 2014|
|Date of revision:|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
- Koichiro Ito, 2012.
"Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing,"
NBER Working Papers
18533, National Bureau of Economic Research, Inc.
- Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-63, February.
- Shanjun Li & Christopher Timmins & Roger H. von Haefen, 2009.
"How Do Gasoline Prices Affect Fleet Fuel Economy?,"
American Economic Journal: Economic Policy,
American Economic Association, vol. 1(2), pages 113-37, August.
- Bento, Antonio M. & Li, Shanjun & Roth, Kevin, 2012.
"Is there an energy paradox in fuel economy? A note on the role of consumer heterogeneity and sorting bias,"
Elsevier, vol. 115(1), pages 44-48.
- Bento, Antonio M. & Li, Shanjun & Roth, Kevin, 2010. "Is There an Energy Paradox in Fuel Economy? A Note on the Role of Consumer Heterogeneity and Sorting Bias," Discussion Papers dp-10-56, Resources For the Future.
- Michael Greenstone & Elizabeth Kopits & Ann Wolverton, 2011.
"Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation,"
1106, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Michael Greenstone & Elizabeth Kopits & Ann Wolverton, 2011. "Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation," NBER Working Papers 16913, National Bureau of Economic Research, Inc.
- David Dranove & Ginger Zhe Jin, 2010.
"Quality Disclosure and Certification: Theory and Practice,"
Journal of Economic Literature,
American Economic Association, vol. 48(4), pages 935-63, December.
- David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," NBER Working Papers 15644, National Bureau of Economic Research, Inc.
- Thomas Klier & Joshua Linn, 2010. "The Price of Gasoline and New Vehicle Fuel Economy: Evidence from Monthly Sales Data," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 134-53, August.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2013. "Are Consumers Myopic? Evidence from New and Used Car Purchases," American Economic Review, American Economic Association, vol. 103(1), pages 220-56, February.
- James M. Sallee, 2014.
"Rational Inattention and Energy Efficiency,"
Journal of Law and Economics,
University of Chicago Press, vol. 57(3), pages 781 - 820.
- McWhinney, Marla & Fanara, Andrew & Clark, Robin & Hershberg, Craig & Schmeltz, Rachel & Roberson, Judy, 2005. "ENERGY STAR product specification development framework: using data and analysis to make program decisions," Energy Policy, Elsevier, vol. 33(12), pages 1613-1625, August.
- Ward, David O. & Clark, Christopher D. & Jensen, Kimberly L. & Yen, Steven T. & Russell, Clifford S., 2011. "Factors influencing willingness-to-pay for the ENERGY STARÂ® label," Energy Policy, Elsevier, vol. 39(3), pages 1450-1458, March.
- Soren T. Anderson & Ryan Kellogg & James M. Sallee & Richard T. Curtin, 2011. "Forecasting Gasoline Prices Using Consumer Surveys," American Economic Review, American Economic Association, vol. 101(3), pages 110-14, May.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:20019. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.