Market failures, consumer preferences, and transaction costs inenergy efficiency purchase decisions

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Several factors limit the energy savings potential and increase the costs of energy-efficient technologies to consumers. These factors may usefully be placed into two categories; one category is what economists would define as market failures and the other is related to consumer preferences. This paper provides a conceptual framework for understanding the roles of these factors, and develops a methodology to quantify their effects on costs and potentials of two energy efficient end uses - residential lighting and clothes washers. It notes the significant roles played by the high implicit cost of obtaining information about the benefits of the two ... continued below

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Sathaye, Jayant & Murtishaw, Scott November 23, 2004.

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Description

Several factors limit the energy savings potential and increase the costs of energy-efficient technologies to consumers. These factors may usefully be placed into two categories; one category is what economists would define as market failures and the other is related to consumer preferences. This paper provides a conceptual framework for understanding the roles of these factors, and develops a methodology to quantify their effects on costs and potentials of two energy efficient end uses - residential lighting and clothes washers. It notes the significant roles played by the high implicit cost of obtaining information about the benefits of the two technologies and the apparent inability to process and utilize information. For compact fluorescent lamps, this report finds a conservative estimate of the cost of conserved energy of 3.1 cents per kWh. For clothes washers, including water savings reduces the cost of conserved energy from 13.6 cents to 4.3 cents per equivalent kWh. Despite these benefits, market share remains low. About 18 million tons of CO2 could be saved cost effectively from 2005 sales of these two technologies alone. The paper also notes that trading of carbon emissions will incur transaction costs that will range from less than 10 cents per metric ton of CO2 for larger size projects and programs to a few dollars per metric ton of carbon for the smaller ones.

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  • Report No.: LBNL--57318
  • Grant Number: DE-AC02-05CH11231
  • DOI: 10.2172/919919 | External Link
  • Office of Scientific & Technical Information Report Number: 919919
  • Archival Resource Key: ark:/67531/metadc902755

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  • November 23, 2004

Added to The UNT Digital Library

  • Sept. 27, 2016, 1:39 a.m.

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  • Sept. 29, 2016, 8:55 p.m.

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Sathaye, Jayant & Murtishaw, Scott. Market failures, consumer preferences, and transaction costs inenergy efficiency purchase decisions, report, November 23, 2004; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc902755/: accessed August 20, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.