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Consumer myopia, imperfect competition and the energy efficiency gap: evidence from the UK refrigerator market

Cohen, François and Glachant, Matthieu and Söderberg, Magnus (2017) Consumer myopia, imperfect competition and the energy efficiency gap: evidence from the UK refrigerator market. European Economic Review, 93. pp. 1-23. ISSN 0014-2921

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Identification Number: 10.1016/j.euroecorev.2017.01.004

Abstract

The empirical literature on the energy efficiency gap concentrates on demand inefficiencies in the energy-using durables markets and finds evidence that consumers underestimate future energy costs when purchasing a new appliance. We take a broader view and also consider the impact of imperfect competition. Using data on the UK refrigerator market (2002-2007), we find that the average energy consumption of appliances sold during this period was only 7.2% higher than what would have been observed under a scenario with a perfectly competitive market and non-myopic consumers. One reason for this small gap is that market power actually reduces energy use.

Item Type: Article
Official URL: http://www.sciencedirect.com/science/journal/00142...
Additional Information: © 2017 Elsevier B.V.
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis
L - Industrial Organization > L6 - Industry Studies: Manufacturing > L68 - Appliances; Other Consumer Durables
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Date Deposited: 02 Feb 2017 10:47
Last Modified: 23 Jun 2017 13:52
URI: http://eprints.lse.ac.uk/id/eprint/69188

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