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Mandatory Energy Efficiency Disclosure in Housing Markets

Author

Listed:
  • Myers, Erica
  • Puller, Steven L
  • West, Jeremy

Abstract

Mandatory disclosure policies are implemented broadly despite sparse evidence that they improve market outcomes. We study the effects of requiring home sellers to provide buyers with certified audits of residential energy efficiency. Using similar nearby homes as a comparison group, we find that this requirement increases price premiums for energy efficiency and encourages energy-saving investments. We additionally present evidence highlighting the market failure—incomplete information by both buyers and sellers—that prevents widespread voluntary disclosure of energy efficiency in housing transactions. Our findings support that disclosure policies can improve market outcomes in settings with symmetrically incomplete information. (JEL D83, K32, L98, Q41, Q48, R31)

Suggested Citation

  • Myers, Erica & Puller, Steven L & West, Jeremy, 2022. "Mandatory Energy Efficiency Disclosure in Housing Markets," Santa Cruz Department of Economics, Working Paper Series qt0nw2m1n4, Department of Economics, UC Santa Cruz.
    • Handle: RePEc:cdl:ucscec:qt0nw2m1n4
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    More about this item

    Keywords

    Economics; Applied Economics; Affordable and Clean Energy; Banking; finance and investment; Applied economics;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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