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Mandatory Energy Efficiency Disclosure in Housing Markets

  • Erica Myers
  • Steven L. Puller
  • Jeremy West
American Economic Journal: Economic Policy
vol. 14, no. 4, November 2022
(pp. 453-87)
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Abstract

Mandatory disclosure policies are implemented broadly despite sparse evidence that they improve market outcomes. We study the effects of requiring home sellers to provide buyers with certified audits of residential energy efficiency. Using similar nearby homes as a comparison group, we find that this requirement increases price premiums for energy efficiency and encourages energy-saving investments. We additionally present evidence highlighting the market failure—incomplete information by both buyers and sellers—that prevents widespread voluntary disclosure of energy efficiency in housing transactions. Our findings support that disclosure policies can improve market outcomes in settings with symmetrically incomplete information.

Citation

Myers, Erica, Steven L. Puller, and Jeremy West. 2022. "Mandatory Energy Efficiency Disclosure in Housing Markets." American Economic Journal: Economic Policy, 14 (4): 453-87. DOI: 10.1257/pol.20200539

Additional Materials

JEL Classification

  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • K32 Environmental, Energy, Health, and Safety Law
  • L98 Industry Studies: Utilities and Transportation: Government Policy
  • Q41 Energy: Demand and Supply; Prices
  • Q48 Energy: Government Policy
  • R31 Housing Supply and Markets
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