Seminars & webinars
3 December 2013

Bunching with the Stars: How Firms Respond to Environmental Certification


Where: Milan
Location:

Fondazione Eni Enrico Mattei
Corso Magenta 63
20123 Milan

***
Video-conference
at FEEM Venice

How to reach: Google map
Event's Timetable:

 

h. 14.30 Seminar

Information:

Seminars Office, seminars@feem.it

Speakers:

Sebastian Houde, University of Maryland, Department of Agricultural and Resources Economics

Abstract

This paper first shows that firms respond strategically to ENERGY STAR, a voluntary certification program for energy efficient products. In the US appliance market, firms offer products that bunch at the certification requirement, and charge a price premium for certified models. The second part of the paper performs  a welfare analysis of the program with an emphasis on firms' strategic response. A model of imperfect competition where firms optimize energy efficiency and prices in response to environmental certification is estimated for the US refrigerator market.  Policy simulations suggest that ENERGY STAR performs surprisingly well from the standpoint of economic efficiency, but most of the welfare gains come from firms' profits. Consumers would be better off in a market without certification. Firms' ability to alter the product mix plays a dominant role in determining the welfare effects.

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Bunching with the Stars: How Firms Respond to Environmental Certification (presentation)
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Bunching with the Stars: How Firms Respond to Environmental Certification (paper)

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