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
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
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