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Does energy efficiency label alter consumers f purchase decision? A latent class approach on Shanghai data

Author

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  • Junyi Shen

    (OSIPP,Osaka University)

  • Tatsuyoshi Saijo

    (ISER,Osaka University)

Abstract

In this paper we apply hypothetical choice experiments through a field survey in Shanghai of China to examine whether China Energy Efficiency Label affects consumers f choices of air conditioner and refrigerator. A latent class approach is used to observe both heterogeneities among the respondents and product brands. The results suggest that the effect of energy efficiency label on consumers f preferences is twofold. First, more energy efficient air conditioners or refrigerators are preferred by consumers, no matter whether they are with foreign brands or domestic brands and whether they are new or second-hand. Second, energy efficiency label per se is recognized by consumers. In addition, presence of a (hypothetical) label that indicates the electricity bill fs difference comparing to a standard model is significantly preferred by the respondents in most of the cases, suggesting that more information provided to consumers makes them much happier. Finally, the class probability weighted willingness to pay values for one rank upgrading in energy efficiency of refrigerator are higher than those of air conditioner, implying that consumers have an incentive to pay more for appliances used more frequently.

Suggested Citation

  • Junyi Shen & Tatsuyoshi Saijo, 2007. "Does energy efficiency label alter consumers f purchase decision? A latent class approach on Shanghai data," OSIPP Discussion Paper 07E005, Osaka School of International Public Policy, Osaka University.
  • Handle: RePEc:osp:wpaper:07e005
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    File URL: http://www.osipp.osaka-u.ac.jp/archives/DP/2007/DP2007E005.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cati Torres & Sergio Colombo & Nick Hanley, 2014. "Incorrectly accounting for preference heterogeneity in choice experiments: what are the implications for welfare measurement?," Discussion Papers in Environment and Development Economics 2014-07, University of St. Andrews, School of Geography and Sustainable Development.
    2. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    3. Doherty, Edel & Campbell, Danny & Hynes, Stephen & van Rensburg, Thomas, 2012. "Labelling effects in discrete choice experiments," Working Papers 148831, Socio-Economic Marine Research Unit, National University of Ireland, Galway.
    4. Simona Rasciute & Eric J Pentecost, 2008. "The Latent Heterogeneity in Investment Location Choices of Multinational Enterprises," Discussion Paper Series 2008_16, Department of Economics, Loughborough University, revised Dec 2008.
    5. Cleff, Thomas & Rennings, Klaus, 2016. "Are there first mover advantages for producers of energy-efficient appliances? The case of refrigerators," Utilities Policy, Elsevier, vol. 42(C), pages 42-50.
    6. Junyi Shen, 2008. "Understanding the determinants of consumers f willingness to pay for eco-labeled products: An empirical analysis of the China Environmental Label," OSIPP Discussion Paper 08E001, Osaka School of International Public Policy, Osaka University.
    7. Stefanie Heinzle, 2012. "Disclosure of Energy Operating Cost Information: A Silver Bullet for Overcoming the Energy-Efficiency Gap?," Journal of Consumer Policy, Springer, vol. 35(1), pages 43-64, March.
    8. Junui Shen & Kazuhito Ogawa & Hiromasa Takahashi, 2014. "Examining the Tradeoff Between Fixed Pay and Performance-Related Pay: A Choice Experiment Approach," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 6(2), pages 119-131, December.

    More about this item

    Keywords

    Energy efficiency label; Consumers f purchase decision; Latent class model; Willingness to pay; China;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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