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Energy‐Efficient Lighting: Market Data, Market Imperfections, And Policy Success

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  • JONATHAN G. KOOMEY
  • ALAN H. SANSTAD
  • LESLIE J. SHOWN

Abstract

Many economists question engineering‐economic studies aimed at demonstrating anomalously slow diffusion of energy‐efficient technology and the benefits of regulations to promote such technology. One argument against such studies is that standard techniques of engineering economics are either inappropriate or are routinely misapplied in assessing the performance of the market for energy efficiency. This paper takes account of such critiques in presenting engineering‐economic evidence on the diffusion of energy efficiency improvements. It examines the engineering and economic characteristics of standard and energy‐efficient magnetic ballasts for fluorescent lighting. Efficient magnetic ballasts represent an excellent investment for 99 percent of the commercial building floor stock and a moderately good investment for 0.7 percent of the commercial floor stock. Still, in the 1980s these ballasts were being adopted only at a rate commensurate with the enactment of appliance efficiency standards in various states. In this case, solid empirical evidence supports skepticism about the effectiveness of the market mechanism in promoting cost‐effective energy efficiency improvements and about the benefits of regulation to counteract this shortcoming.

Suggested Citation

  • Jonathan G. Koomey & Alan H. Sanstad & Leslie J. Shown, 1996. "Energy‐Efficient Lighting: Market Data, Market Imperfections, And Policy Success," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 98-111, July.
    • Handle: RePEc:bla:coecpo:v:14:y:1996:i:3:p:98-111
    DOI: 10.1111/j.1465-7287.1996.tb00627.x
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    References listed on IDEAS

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    Cited by:

    1. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    2. DeCanio, Stephen J. & Watkins, William E., 1998. "Information processing and organizational structure," Journal of Economic Behavior & Organization, Elsevier, vol. 36(3), pages 275-294, August.
    3. Sezgen, Osman & Koomey, Jonathan G, 2000. "Interactions between lighting and space conditioning energy use in US commercial buildings," Energy, Elsevier, vol. 25(8), pages 793-805.
    4. Graus, Wina & Worrell, Ernst, 2008. "The principal-agent problem and transport energy use: Case study of company lease cars in the Netherlands," Energy Policy, Elsevier, vol. 36(10), pages 3745-3753, October.
    5. Cagno, E. & Worrell, E. & Trianni, A. & Pugliese, G., 2013. "A novel approach for barriers to industrial energy efficiency," Renewable and Sustainable Energy Reviews, Elsevier, vol. 19(C), pages 290-308.
    6. Thompson, Philip B, 1997. "Evaluating energy efficiency investments: accounting for risk in the discounting process," Energy Policy, Elsevier, vol. 25(12), pages 989-996, October.
    7. Häckel, Björn & Pfosser, Stefan & Tränkler, Timm, 2017. "Explaining the energy efficiency gap - Expected Utility Theory versus Cumulative Prospect Theory," Energy Policy, Elsevier, vol. 111(C), pages 414-426.
    8. Philip B. Thompson, 2002. "Consumer Theory, Home Production, And Energy Efficiency," Contemporary Economic Policy, Western Economic Association International, vol. 20(1), pages 50-59, January.
    9. Sovacool, Benjamin K. & Hirsh, Richard F., 2009. "Beyond batteries: An examination of the benefits and barriers to plug-in hybrid electric vehicles (PHEVs) and a vehicle-to-grid (V2G) transition," Energy Policy, Elsevier, vol. 37(3), pages 1095-1103, March.

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