Peter Michaelis, Thomas Ziesemer
On dynamic standards for energy efficiency in
differentiated duopoly
Abstract:
We
consider a two-periods-model of differentiated
duopoly. Firms produce an en-ergy consuming household durable
differentiated by
its energy efficiency. Consumers differ by the weight they apply to
their
future 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 in t=1 both
firms
supply lower efficiency products and the high efficiency firm gains in
market
share and profits. In t=2 these effects are re-versed. Calculated over
both
periods, total energy consumption does not change. Although there is no
ecological
effect, total welfare increases because price competition becomes
tighter and
the cost savings accruing to the consumers exceed the firms’ losses in
profits.
JEL: L13, Q48, Q58
Paper:
Paper available as pdf-file.
Beitrag Nr. 325, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Peter
Michaelis, University of Augsburg, Department of Economics,
D-86135
Augsburg,
Germany, phone +49-821-598-4058, fax +49-821-598-4217,
email: peter.michaelis@wiwi.uni-augsburg.de
Thomas
Ziesemer, University of Augsburg, Department of Economics,
D-86135
Augsburg,
Germany, phone +49-821-598-4061, fax +49-821-598-4217,
email: thomas.ziesemer@wiwi.uni-augsburg.de
Bo.,
11.11.2015