Tagging and Targeting of Energy Efficiency Subsidies
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Knittel_Tagging and.pdf
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474.39 KB
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Author(s)
Allcott, Hunt
Taubinsky, Dmitry
Knittel, Christopher Roland
Date Issued
May 2015
Journal
American Economic Review
Publisher
American Economic Association
Citation
Allcott, Hunt, Christopher Knittel, and Dmitry Taubinsky. “Tagging and Targeting of Energy Efficiency Subsidies.” American Economic Review 105, no. 5 (May 2015): 187–91. © 2015 American Economic Association
Version
Final published version
Abstract
A corrective tax or subsidy is "well-targeted" if it primarily affects choices that are more distorted by market failures. Energy efficiency subsidies are designed to correct multiple distortions: externalities, credit constraints, "landlord-tenant" information asymmetries, imperfect information, and inattention. We show that three important energy efficiency subsidies are primarily taken up by consumers who are wealthier, own their own homes, and are more informed about and attentive to energy costs. This suggests that these subsidies are poorly targeted at the market failures they were designed to address. However, we show that "tagging" can lead to large efficiency gains.
MIT Department
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/aer.p20151008
