Impact of energy-using product policies

Salmons, R. 2011. Impact of energy-using product policies. 18th Annual Conference of the European Association of Environmental and Resource Economists. Rome, Italy 29 Jun – 02 Jul 2011

TitleImpact of energy-using product policies
AuthorsSalmons, R.
TypeConference paper
Abstract

Energy-using products (EuPs), such as domestic appliances, audio-visual and ICT equipment contribute significantly to CO2 emissions, both in the domestic and non-domestic sectors. Policies that encourage the use of more energy efficient products can therefore generate significant reductions in overall energy consumption and hence, CO2 emissions. To the extent that these policies cause an increase the average production cost of EuPs, they may impose economic costs on producers, or on consumers, or on both. In this theoretical paper, an adaptation of a simple vertical product differentiation model – in which products are characterised in terms of their quality and their energy consumption – is used to analyse the impact of the different EuP polices on product innovation and to assess the resultant economic impacts on producers and consumers. It is shown that whereas the imposition of a binding product standard for energy efficiency unambiguously reduces aggregate profit and increases the average market price in the absence of any learning effects, the introduction or strengthening of demand-side measures (such as energy labelling) may reduce, or increase, aggregate profit. Even in the case where the overall impact is unambiguously negative, the effects of product innovation and learning can be in either direction.

Year2011
Conference18th Annual Conference of the European Association of Environmental and Resource Economists
Publication dates
Completed2011
Web address (URL) of conference proceedingshttp://www.webmeets.com/EAERE/2011/prog/viewpaper.asp?pid=779

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