Template-Type: ReDIF-Article 1.0
Author-Name:  Franz Wirl
Title:  Incentivizing Energy Efficiency under Private Information: The Social Optimum
Classification-JEL: F0
Volume:  Volume 40
Issue:  Number 6
Year:  2019
Abstract:  This paper addresses how far public initiatives should try to eliminate the energy efficiency gap if consumers hold private information about their willingness to pay for efficiency. The major finding is that even socially optimal efficiency programs should only close a fraction of the gap. This conclusion has to be strengthened if the external costs of energy were internalized, because an intervention is then only justified for low costs of public funds and very large payback gaps. Furthermore, the realistic assumption of private information implies that the highest subsidies must be paid to efficient types, which turns incentives based on perfect information upside down. 
Handle: RePEc:aen:journl:ej40-6-Wirl
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=3425
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