Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/211172
Authors: 
Voss, Achim
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 013.2019
Abstract: 
I analyze energy-efficiency policy as a prescription of a minimum-efficiency standard for energy-using household goods like cars, building insulation, and home appliances. Such a policy has two effects. At the intensive margin, a household that invests will choose a more efficient device. At the extensive margin, there will be more households that choose not to invest at all. Thus, additional to and different from rebound effects, energy-efficiency policy may have unintended consequences. I analyze the equilibrium effects of a minimum-efficiency standard, taking price adjustments and household heterogeneity into account. A moderate minimum-efficiency standard increases demand for efficiency-enhancing household capital goods, and reduces energy demand. More stringent policy is shown to be less effective or even counterproductive. For the case of a fixed supply of efficiency-enhancing capital, it is shown that minimum-efficiency standards increase equilibrium energy demand. Finally, I analyze which households benefit from minimum-efficiency standards and which ones lose. A standard induces investing households to expend more for household capital and less for energy. The wedge between the induced expenditures and the private optimum is analyzed as a deadweight loss.
Subjects: 
Energy Efficiency
Rebound Effects
Household Heterogeneity
Extensive Margin
Gruenspecht Effect
Investment
Theory of Environmental Policy
JEL: 
Q41
Q48
D15
Document Type: 
Working Paper

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