The Energy Paradox and the Diffusion of Conservation Technology


Jaffe, Adam B, and Robert N Stavins. “The Energy Paradox and the Diffusion of Conservation Technology.” Resource and Energy Economics 16 (1994): 91–122.

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We develop a framework for thinking about the 'paradox' of very gradual diffusion of apparently cost-effective energy-conservation technologies. Our analysis provides some keys to understanding why this technology-diffusion process i.s gradual, and focuses attention on the factors that cause this to be the case, including those associated with potential market failures - information problems, principal/agent slippage, and unobserved costs - and those explanations that do not represent market failures - private information costs, high discount rates, and heterogeneity among potential adopters. Additionally, our analysis indicates how alternative policy instruments - both economic incentives and direct regulations can hasten the diffusion of energy-conserving technologies.



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