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Banning Products with Low Energy Efficiency: Market Response and Adjustment Cost

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  • Thiess Buettner
  • Anne Kesselring

Abstract

This study analyzes a regulation that banned household appliances with energy efficiency below a minimum standard from the European Union’s common market in 2014. Based on a dataset reporting unit sales at product level, we conduct an empirical analysis of the product-characteristics space. This permits us to explore the market response in terms of energy efficiency and size of products and to estimate the adjustment cost. Though our results show that the product ban induced a sizable market transformation toward products with higher energy efficiency, we find that the minimum standard is set inefficiently low: if the regulation banned a larger segment of the market, higher energy savings could be obtained at lower adjustment cost.

Suggested Citation

  • Thiess Buettner & Anne Kesselring, 2024. "Banning Products with Low Energy Efficiency: Market Response and Adjustment Cost," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 11(6), pages 1487-1526.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/730148
    DOI: 10.1086/730148
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