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 energy efficiency in the dishwasher market in Spain. The estimations suggest that 15.6% of the final price is paid for the characteristic represented by the A+ label. This accounts for about 80€ of the average price. We use this estimate combined with a demand system 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 ones calculated using the Linear Almost Ideal Demand System (LA/AIDS). The comparison of the results confirm that the QBDS model is easier to handle and less data demanding than the LA/AIDS model while providing reliable estimates of demand elasticities.