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An economic analysis of the “Home Appliance Eco-Point System” in Japan

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  • Ken-Ichi Akao

    (Waseda University)

Abstract

The Home Appliance Eco-Point System was a subsidy program implemented by the Japanese government from May 2009 to March 2011. The system has two features. First, the subsidy was provided in the form of eco-points that were only exchangeable for environmentally friendly goods. Second, it was a replacement subsidy program for durable goods with uncertain termination dates. We investigate the policy implications of these features. We show that if the eco-points are exchangeable for any goods (i.e., if a simple rebate program rather than an eco-point system is implemented), the same outcome can be achieved at a lower subsidy rate and thus using fewer financial resources. Regarding the eco-point system as a replacement subsidy, we show that the uncertain termination has the same effect as an increase in the subsidy: both accelerate the replacement. Uncertainty is a substitute for a subsidy, thus saving the financial resources of the government. However, there are two welfare concerns: (a) acceleration may not be desirable in terms of the environment, and (b) it costs households their expected utility.

Suggested Citation

  • Ken-Ichi Akao, 2017. "An economic analysis of the “Home Appliance Eco-Point System” in Japan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(3), pages 483-501, July.
    • Handle: RePEc:spr:envpol:v:19:y:2017:i:3:d:10.1007_s10018-016-0156-3
    DOI: 10.1007/s10018-016-0156-3
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    References listed on IDEAS

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    1. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249.
    2. Viviana P. Fernandez, 2000. "Decisions To Replace Consumer Durables Goods: An Econometric Application Of Wiener And Renewal Processes," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 452-461, August.
    3. Prince, Jeffrey T., 2009. "How do households choose quality and time to replacement for a rapidly improving durable good?," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 302-311, March.
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    More about this item

    Keywords

    Eco-point; Environmentally friendly goods; Voucher; Replacement subsidy; Uncertain termination;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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