Split incentives, asymmetric information and energy efficiency subsidies

52 Pages Posted: 18 May 2022 Last revised: 29 Aug 2023

See all articles by Sven Damen

Sven Damen

University of Antwerp

Geert Goeyvaerts

KU Leuven - Department of Economics

Stef Schildermans

KU Leuven

Date Written: August 09, 2023

Abstract

We examine whether adverse selection due to asymmetric information reduces the cost-effectiveness of subsidy programs for energy efficiency investments. In 2009, the Flemish government introduced a reduction in the property tax for newly built houses whose energy efficiency level is below a specific threshold. We find that the response of houses built by a developer is four times smaller than the response of houses built by the owners themselves. This makes the program only half as cost-effective for developer-built housing. Additional data suggests information concerning the efficiency level of housing units was asymmetric between developers and buyers. It usually takes several years before the efficiency level is officially determined and it is not always correctly reported in listings.

Keywords: Split incentives, asymmetric information, energy efficiency, subsidies

JEL Classification: D82, H23, Q48, R31,

Suggested Citation

Damen, Sven and Goeyvaerts, Geert and Schildermans, Stef, Split incentives, asymmetric information and energy efficiency subsidies (August 09, 2023). Available at SSRN: https://ssrn.com/abstract=4109524 or http://dx.doi.org/10.2139/ssrn.4109524

Sven Damen

University of Antwerp ( email )

Prinsstraat 13
Antwerp, 2000
Belgium

HOME PAGE: http://www.svendamen.com

Geert Goeyvaerts (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

Stef Schildermans

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

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