Reports
Discussion Papers
No.607 Should Energy Efficiency Be Traded Off for Other Product Attributes? An Analysis of Air-Conditioner Regulation in Japan
by Kensuke KUBO , Mariko WATANABE and Michikazu KOJIMA
June 2016
ABSTRACT
This
paper
examines
the
functioning
of
energy
efficiency
standards
and
labeling
policies
for
air
conditioners
in
Japan.
The
results
of
our
empirical
analysis
suggest
that
consumers
respond
more
to
label
information,
which
benchmarks
the
energy
efficiency
performance
of
each
product
to
a
pre-specified
target,
than
to
direct
performance
measures.
This
finding
provides
justification
for
the
setting,
and
regular
updating,
of
target
standards
as
well
as
their
use
in
calculating
relative
performance
measures.
We
also
find,
through
graphical
analysis,
that
air
conditioner
manufacturers
face
a
tradeoff
between
energy
efficiency
and
product
compactness
when
they
develop
their
products.
This
tradeoff,
combined
with
the
semi-regular
upward
revision
of
minimum
energy
efficiency
standards,
has
led
to
the
growth
in
indoor
unit
size
of
air
conditioners
in
recent
years.
In
the
face
of
this
phenomenon,
regulatory
rules
were
revised
so
that
manufacturers
could
adhere
to
less
stringent
standards
if
the
indoor
unit
size
of
their
product
remains
below
a
certain
size.
Our
demand
estimates
provide
no
evidence
that
larger
indoor
unit
size
causes
disutility
to
consumers.
It
is
therefore
possible
that
the
regulatory
change
was
not
warranted
from
a
consumer
welfare
point
of
view.
Keywords:
energy
efficiency
standard
and
labeling,
promotion
policies
JEL
classification:
F15,
O14,
O30
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.