Market barriers to energy efficiency
- Lawrence Berkeley Lab., CA (United States)
- Stockholm School of Economics (Sweden)
Discussions of energy policy in an environmentally constrained world often focus on the use of tax instruments to internalize the external effects of energy utilization or achieve specified reductions in energy use in the most cost-effective manner. A substantial literature suggests, however, that significant opportunities exist to reduce energy utilization by implementing technologies that are cost-effective under prevailing economic conditions but that are not fully implemented by existing market institutions. This paper examines the theory of the market for energy-using equipment, showing that problems of imperfect information and transaction costs may bias rational consumers to purchase devices that use more energy than those that would be selected by a well-informed social planner guided by the criterion of economic efficiency. Consumers must base their purchase decisions on observed prices and expectations of postpurchase equipment performance. If it is difficult or costly for individuals to form accurate and precise expectations, the level of energy efficiency achieved by competitive markets will vary from the socially efficient outcome. Such market barriers'' suggest a role for regulatory intervention to improve market performance at prevailing energy prices.
- Research Organization:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Organization:
- USDOE; SENEA; NORC; USDOE, Washington, DC (United States); Statens Energiverk, Stockholm (Sweden); Norges Almenvitenskapelig Forskningsraad, Oslo (Norway)
- DOE Contract Number:
- AC03-76SF00098
- OSTI ID:
- 7001460
- Report Number(s):
- LBL-32541; ON: DE93001587
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
ENERGY EFFICIENCY
CONSTRAINTS
ECONOMIC ANALYSIS
ENERGY POLICY
ENVIRONMENTAL IMPACTS
EQUATIONS
MARKET
REGULATIONS
ECONOMICS
EFFICIENCY
GOVERNMENT POLICIES
291000* - Energy Planning & Policy- Conservation
320000 - Energy Conservation
Consumption
& Utilization