Energy Efficiency Promoting Program and Market Competition in Taiwan Jin-Long Liu Professor Graduate Institute of Industrial Economics National Central University Taiwan Ling-Ju Lin Senior Administrator Industrial Technology Research Institute Taiwan 2018/5/21 中正大學經濟系專題討論

The Motivation

Following the Paris Agreement, changing the way of producing and consuming energy have been the most important issues over the next decades. To increasing energy efficiency and conservation is one of the majority methods to the issues of the energy uses. The improvement of the energy efficiency is regards as a win-win policy. (Allcott and Greenstone, 2012) Energy efficiency standards and labelling (EESL) programs have been widely used to promote the investment on the energy- efficient home appliances and equipment. More than 80 countries around the word and 50 different types of appliances and equipment have adopted EESL programs. (IEA, 2016)

The studies for the effect of EESL program included: In the past decade, unit average efficiency improvements has showed an increases of 23% for the room air conditioners, 21% for the washing machine, and 16% for the refrigerators. (IEA, 2017) The EESL program has an average of 30% immediate improving effect while it was implemented. (IEA, 2016) The studies for the effect of EESL program included: Mills and Schleich (2010)– Germany Li et al. (2016) ; Davis and Metcalf (2016) ; Houde and Aldy(2017) -- US Miyazaki(2016) ; Mizobuchi and Takeuchi (2016) -- Japan None of previous studies discussed the effects of market competition.

Does the policy promote the market competition? The Issue Does the policy promote the market competition?

The Program in Taiwan

Taiwan Energy Efficiency Program Compulsory Energy Efficiency Rating Label Program Starting from 2010 Originally, applied to air conditioners, refrigerators, automobiles, and motorcycles. Major home appliances are applied so far. Energy efficiency rating level 5 (most energy consuming) 1 (most energy saving)

The Method and Data

The concentration ratio for the four-leading firms ( 𝐶𝑅 4 )and the Herfindahi-Hirschman Index (HHI) which are based on the market shares. Administration data collected from those manufacturers and importers who must apply and report the sales of the products in Taiwanese market.

The Results

Conclusion The market structure underlying the efficiency label I and II (more energy saving) is toward to perfect competition on the system, however, the market structure underlying the efficiency label IV and V (less energy saving) is toward to a tight oligopoly. Overall, the energy efficiency rating labelling program in Taiwan shows the effects of promoting the market competition.

Thanks!