On the economic analysis of problems in energy efficiency: Market barriers, market failures, and policy implications
In his recent paper in The Energy Journal, Ronald Sutherland argues that several so-called ``market barriers`` to energy efficiency frequently cited in the literature are not market failures in the conventional sense and are thus irrelevant for energy policy. We argue that Sutherland has inadequately analyzed the idea of market barrier and misrepresented the policy implications of microeconomics. We find that economic theory, correctly interpreted, does not provide for the categorical dismissal of market barriers. We explore important methodological issues underlying the debate over market barriers, and discuss the importance of reconciling the findings of non-economic social sciences with the economic analysis of energy demand and consumer decision-making. We also scrutinize Sutherland`s attempt to apply finance theory to rationalize high implicit discount rates observed in energy-related choices, and find this use of finance theory to be inappropriate.
- Research Organization:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Organization:
- USDOE, Washington, DC (United States)
- DOE Contract Number:
- AC03-76SF00098
- OSTI ID:
- 10163874
- Report Number(s):
- LBL-32652; ON: DE93015227; TRN: 93:020880
- Resource Relation:
- Other Information: PBD: Jan 1993
- Country of Publication:
- United States
- Language:
- English
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