January 2, 2011

Are Energy Efficiency Standards Justified?

by Ian W.H. Parry, David Evans and Wallace E. Oates

- This paper develops and parameterizes an overarching analytical framework to estimate the welfare effects of energy efficiency standards applied to automobiles and electricity-using durables. We also compare standards with sectoral and economywide pricing policies. The model captures a wide range of externalities and preexisting energy policies, and it allows for possible "misperceptions" - market failures that cause underinvestment in energy efficiency.

Ian W.H. Parry, David Evans and Wallace E. Oates (2010). "Are Energy Efficiency Standards Justified?" RFF Discussion Paper 10-59, Nov 2010.