Energy Efficiency Economics and Policy

35 Pages Posted: 4 Apr 2009 Last revised: 4 Nov 2014

See all articles by Kenneth Gillingham

Kenneth Gillingham

Yale University

Richard G. Newell

Duke University - Nicholas School of Environment; National Bureau of Economic Research (NBER); Resources for the Future

Karen L. Palmer

Resources for the Future

Multiple version iconThere are 4 versions of this paper

Date Written: April 3, 2009

Abstract

Energy efficiency and conservation are considered key means for reducing greenhouse gas emissions and achieving other energy policy goals, but associated market behavior and policy responses have engendered debates in the economic literature. We review economic concepts underlying consumer decisionmaking in energy efficiency and conservation and examine related empirical literature. In particular, we provide an economic perspective on the range of market barriers, market failures, and behavioral failures that have been cited in the energy efficiency context. We assess the extent to which these conditions provide a motivation for policy intervention in energy-using product markets, including an examination of the evidence on policy effectiveness and cost. While theory and empirical evidence suggest there is potential for welfare-enhancing energy efficiency policies, many open questions remain, particularly relating to the extent of some of the key market and behavioral failures.

Keywords: energy efficiency, appliance standards, energy policy, market failures, behavioral failures

JEL Classification: Q38, Q41

Suggested Citation

Gillingham, Kenneth and Newell, Richard G. and Palmer, Karen, Energy Efficiency Economics and Policy (April 3, 2009). RFF Discussion Paper No. 09-03. Available at SSRN: https://ssrn.com/abstract=1372872 or http://dx.doi.org/10.2139/ssrn.1372872

Kenneth Gillingham

Yale University ( email )

New Haven, CT 06511
United States
203-436-5465 (Phone)

HOME PAGE: http://www.yale.edu/gillingham

Richard G. Newell (Contact Author)

Duke University - Nicholas School of Environment ( email )

Box 90228
Durham, NC 27708-0328
United States
919-681-8865 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Karen Palmer

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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