Energy-efficient design, consumer awareness, and public policy
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Energy-efficient design, consumer awareness, and public policy Carmen Arguedas1
· Sandra Rousseau2
Received: 16 July 2020 / Accepted: 28 October 2020 © The Author(s) 2020
Abstract To facilitate the energy transition, regulators can choose between several policy options to stimulate energy-efficient design by firms. One possibility is to target firms directly through standards or subsidies. Alternatively, it is possible to influence firms indirectly by targeting firms’ stakeholders and raising consumer awareness through information campaigns and education. In this paper, we focus specifically on the pivotal role of consumers and we investigate the effectiveness of subsidies, product standards, and education in improving firms’ environmental performance through energy-efficient product design. In particular, we investigate the importance of the interaction effect between the regulation and consumers’ environmental awareness under different market structures. We find that a policy based on a product standard can counteract the negative effects of crowding-out consumers’ intrinsic motivation in a monopoly setting, although this counteracting effect is less powerful under a duopoly. However, a subsidy does not provide such a backup system and the full effect of crowding-out will be visible. Keywords Environmental policy instruments · Energy-efficient design · Crowding-in/crowding-out · Consumer awareness JEL Classification C72 · D43 · H23 · L51 · Q58
The authors wish to thank two anonymous referees for very useful comments on an earlier version of the paper, as well as financial support from the Spanish Ministry of Economy and Competitiveness under research project ECO2017-82449-P.
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Carmen Arguedas [email protected]
1
Department Economic Analysis, Autonomous University of Madrid, Madrid, Spain
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Faculty of Economics and Business, KU Leuven, Leuven, Belgium
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1 Introduction Citizens and governments are increasingly worried about satisfying societal needs without exceeding our planetary boundaries (Raworth 2017). Resource scarcity, climate change, and environmental concerns have stimulated companies and regulators to promote a move toward a decarbonized and sustainable economy. The energy transition plays a crucial role in this evolution as ‘access to clean, affordable and reliable energy has been a cornerstone of the world’s increasing prosperity and economic growth’ (Chu and Majumdar 2012, p. 294) or as Peter Voser as CEO of Royal Dutch Shell said ‘energy is the oxygen of the economy’ (World Economic Forum 2012, p. 2). Core elements of the energy transition are decarbonization and decreasing energy demand. A wide variety of actions and policies are used, and needed, to facilitate this transition. In this paper, we focus on firms’ decisions regarding energy-efficient product design. Energy-efficient product design is closely related to the concepts of green design or eco-design, which aim at reducing the environmental impact of products, including the energy consumption throughout their entir
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