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Xiaobing ZHANG (DTU University) – “Consumers myopia and energy efficiency gap in China: Evidence from the air conditioner market”
Applied Micro Seminar : Every Tuesday
Time: 12:15 pm – 13:30 pm
Date: 20th of June
Room : 3001
Xiaobing ZHANG (DTU University) – Consumers myopia and energy efficiency gap in China: Evidence from the air conditioner market
As one of the most common adaptation or coping strategies to a warming world, air conditioning consumes large amount of energy and thus the adoption of energy-efficient air conditioners (ACs) has important implications in energy-saving and emission reduction. This paper investigates consumers’ tradeoff decision between capital upfront costs and future energy costs in the choice of ACs, using product-level data from the AC market in China for 295 cities from 2013 to 2018. The results show that the Chinese consumers are myopic in the choice of ACs, with an implicit discount rate of around 39%, indicating that consumers heavily undervalue the energy costs and there is an energy efficiency gap in AC adoption in China. Besides, the implicit discount rates are found lower for consumers in cities with higher per-capita GDP, higher education, and smaller household size. On average, myopia leads to an increase in energy consumption by around 12% and a welfare loss of 57.6 Yuan for each consumer in the Chinese AC market.
Benoît SCHMUTZ (Pôle d’économie du CREST)
Roland RATHELOT (Pôle d’économie du CREST)