Asymmetric information on the market for energy efficiency: Insights from the credence goods literature

Imperfect information is widely acknowledged to hamper the adoption of energy efficient technologies. In this paper, we study supply-side implications of theassociated incentive structure. We build on existing evidence suggesting that energyefficiency owns a credence component, whereby the supply side of the market hasmore information about what technology is best for consumers. The literature oncredence goods markets suggests that informational advantage by an expert-seller leads to market inefficiencies, including low trade volume. We start by developing a simple framework to study supply-side incentives related to the provision of energy efficient technologies. We then document inefficiencies and potential remediesby discussing linkages between an empirical literature on credence goods and thaton the market for energy efficiency. Doing so, we identify policy implications andresearch gaps that are relevant for the adoption of energy efficiency technologies.