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On Dynamic Standards for Energy Efficiency in Differentiated Duopoly

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We consider a two-period model of differentiated duopoly. Firms produce an energy-consuming good differentiated by its energy efficiency. Consumers differ by the weight they apply to energy costs when deciding which product to buy. In line with the Japanese Top Runner Program, the regulator introduces a minimum efficiency standard in period t = 2, which is fixed according to the efficiency of the product supplied by the high-efficiency firm in t = 1. We show that total energy consumption is decreasing, but the effect on welfare is ambiguous. It depends on the discount rate and the minimum weight consumers apply to energy costs. (JEL: L13, Q48, Q58)
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Document Type: Research Article

Publication date: 01 December 2017

This article was made available online on 08 February 2017 as a Fast Track article with title: "On Dynamic Standards for Energy Efficiency in Differentiated Duopoly".

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  • Founded as Zeitschrift für die gesamte Staatswissenschaft in 1844.

    As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.

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