Evaluating the Role of Energy Efficiency Labels: the Case of Dish Washers

Abstract

This article uses the hedonic approach to estimate how much is paid for the energy efficiency label on the dishwasher market in Spain. The estimated figure is 15.6% of the final price. This accounts for about 80€ of the average price. We use this estimate combined with a demand systems to obtain own and cross price elasticities of demand, vital for policy designing and analysis. This is done by combining the use of the estimate with the Quantity Based Demand System (QBDS) model to completely determine the demand function for different dishwashers. Finally, the elasticity results are compared with the figure calculated using the Linear Almost Ideal Demand System (LA/AIDS). The comparison of the results confirms that the QBDS model is easier to handle and less data demanding than the LA/AIDS model but provide reliable estimates of demand elasticities.