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Behavioral responses of green builders to discontinuous certification schemes

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  • Atasoy, Ayse Tugba

Abstract

I study behavioral responses to the green building certification system developed by the Leadership in Energy and Environmental Design program (LEED). LEED provides four different certification levels (Certified, Silver, Gold, and Platinum) that are all defined by a specific threshold. Using micro data on LEED-certified buildings, I document bunching of buildings at or slightly above the different cutoffs. The findings are robust to different specifications, observed for different versions of LEED. Using the methods from the public finance literature, which studies bunching responses to ‘kinks’ and ‘notches’ in tax systems (e.g., Kleven and Waseem, 2013; Chetty et al., 2011), I quantify the bunching mass at each threshold and for different US states to explain variance in observed bunching. Using cross-sectional variation in bunching across different states of the US, I find a significant negative relationship between the bunching estimators and energy prices. This finding suggests that higher energy prices provide investors with incentives to compare the detailed product features and in turn reduces the building developers’ incentive to situate right at the certification cutoff.

Suggested Citation

  • Atasoy, Ayse Tugba, 2020. "Behavioral responses of green builders to discontinuous certification schemes," Resource and Energy Economics, Elsevier, vol. 60(C).
  • Handle: RePEc:eee:resene:v:60:y:2020:i:c:s0928765518300708
    DOI: 10.1016/j.reseneeco.2019.101141
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    4. Frieling, Julius & Madlener, Reinhard, 2017. "Fueling the US Economy: Energy as a Production Factor from the Great Depression until Today," FCN Working Papers 2/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    5. Höwer, Daniel & Oberst, Christian A. & Madlener, Reinhard, 2017. "Regionalization Heuristic to Map Spatial Heterogeneity of Macroeconomic Impacts: The Case of the Green Energy Transition in NRW," FCN Working Papers 13/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised 01 Feb 2019.
    6. Fleiter, Jannik & Atasoy, Ayse Tugba & Madlener, Reinhard, 2023. "Household Responses to the Tax Treatment of Income from Solar PV Feed-in in Germany," FCN Working Papers 8/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    7. Collins, Matthew & Curtis, John, 2018. "Bunching of residential building energy performance certificates at threshold values," Applied Energy, Elsevier, vol. 211(C), pages 662-676.
    8. Sun, Jile & Zhang, Na & Sun, Yang & Su, Yong, 2024. "Fiscal policy’s impact on the efficiency of natural resources for a green economic recovery," Resources Policy, Elsevier, vol. 90(C).

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    More about this item

    Keywords

    Labels; Green buildings; Energy efficiency; Notches; Bunching;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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