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Dynamic Adjustment of Eco‐labeling Schemes and Consumer Choice – the Revision of the EU Energy Label as a Missed Opportunity?

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  • Stefanie Lena Heinzle
  • Rolf Wüstenhagen

Abstract

Products with a superior environmental performance, such as a high level of energy efficiency, are typically subject to information asymmetries. Therefore these product attributes are often undervalued in purchase decisions. Signaling, e.g. energy labeling, can overcome these asymmetries, with positive implications for effective consumer decisions, competitive advantage for suppliers of energy‐efficient goods, and for societal goals such as mitigating climate change. However, there is a scarcity of research investigating how energy labels actually influence consumer choice. The recent revision of the European Union energy label provided a unique opportunity to investigate the effectiveness of energy labeling in a quasi field‐experimental setting. We show that the proposed extension of the seven‐point A–G rating scale by adding new classes A+, A++, etc. will result in a lower perceived importance of energy efficiency in consumer decision‐making. Based on a stated preference survey investigating 2244 choices by German consumers, we conclude that the revision actually undermines the label's ability to overcome information asymmetries, hence potentially contributing to market failure. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.

Suggested Citation

  • Stefanie Lena Heinzle & Rolf Wüstenhagen, 2012. "Dynamic Adjustment of Eco‐labeling Schemes and Consumer Choice – the Revision of the EU Energy Label as a Missed Opportunity?," Business Strategy and the Environment, Wiley Blackwell, vol. 21(1), pages 60-70, January.
    • Handle: RePEc:bla:bstrat:v:21:y:2012:i:1:p:60-70
    DOI: 10.1002/bse.722
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    Cited by:

    1. Zou, Baoling & Mishra, Ashok K., 2020. "Appliance usage and choice of energy-efficient appliances: Evidence from rural Chinese households," Energy Policy, Elsevier, vol. 146(C).
    2. Shichang Liang & Min Zhang & Yuxuan Chu & Lingling He, 2022. "Should “Green” Be Precise? The Effect of Information Presentation on Purchasing Intention of Green Products," Sustainability, MDPI, vol. 14(16), pages 1-16, August.
    3. Mieko Fujisawa & Kazuhisa Takemura & Yukihiko Funaki & Nobuyuki Uto & Ryo Takahashi, 2020. "An Experimental Study of the Effect of Energy Label Design on the Correct Evaluation of Buildings' Energy Performance and Promotion of Energy Saving," International Real Estate Review, Asian Real Estate Society, vol. 23(1), pages 733-762.
    4. Stefano Ceolotto & Eleanor Denny, 2021. "Putting a new 'spin' on energy labels: measuring the impact of reframing energy efficiency on tumble dryer choices in a multi-country experiment," Trinity Economics Papers tep1521, Trinity College Dublin, Department of Economics.
    5. Schleich, Joachim & Durand, Antoine & Brugger, Heike, 2021. "How effective are EU minimum energy performance standards and energy labels for cold appliances?," Energy Policy, Elsevier, vol. 149(C).
    6. Faure, Corinne & Guetlein, Marie-Charlotte & Schleich, Joachim, 2021. "Effects of rescaling the EU energy label on household preferences for top-rated appliances," Energy Policy, Elsevier, vol. 156(C).
    7. Stanley Kam Sing Wong, 2013. "Environmental Requirements, Knowledge Sharing and Green Innovation: Empirical Evidence from the Electronics Industry in China," Business Strategy and the Environment, Wiley Blackwell, vol. 22(5), pages 321-338, July.
    8. Carroll, James & Brazil, William & Howard, Michael & Denny, Eleanor, 2022. "Imperfect emissions information during flight choices and the role of CO2 labelling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 165(C).
    9. Olsthoorn, Mark & Schleich, Joachim & Guetlein, Marie-Charlotte & Durand, Antoine & Faure, Corinne, 2023. "Beyond energy efficiency: Do consumers care about life-cycle properties of household appliances?," Energy Policy, Elsevier, vol. 174(C).
    10. Filippini, Massimo & Obrist, Adrian, 2022. "Are households living in green certified buildings consuming less energy? Evidence from Switzerland," Energy Policy, Elsevier, vol. 161(C).

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