Product innovation and the costs of energy-using product policies

Energy-using Products (EuPs) contribute significantly to the United Kingdom’s CO2 emissions, both in the domestic and non-domestic sectors. Policies that encourage the use of more energy efficient products (such as minimum performance standards, energy labelling, enhanced capital allowances, etc.) can therefore generate significant reductions in overall energy consumption and hence, CO2 emissions. While these policies can impose costs on the producers and consumers of these products in the short run, the process of product innovation may reduce the magnitude of these costs over time. If this is the case, then it is important that the impacts of innovation are taken into account in policy impact assessments. Previous studies have found considerable evidence of experience curve effects for EuP categories (e.g. refrigerators, televisions, etc.), with learning rates of around 20% for both average unit costs and average prices; similar to those found for energy supply technologies. Moreover, the decline in production costs has been accompanied by a significant improvement in the energy efficiency of EuPs. Building on these findings and the results of an empirical analysis of UK sales data for a range of product categories, this paper sets out an analytic framework for assessing the impact of EuP policy interventions on consumers and producers which takes explicit account of the product innovation process. The impact of the product innovation process can be seen in the continuous evolution of the energy class profiles of EuP categories over time; with higher energy classes (e.g. A, A+, etc.) entering the market and increasing their market share, while lower classes (e.g. E, F, etc.) lose share and then leave the market. Furthermore, the average prices of individual energy classes have declined over their respective lives, while new classes have typically entered the market at successively lower “launch prices”. Based on two underlying assumptions regarding the shapes of the “lifecycle profiles” for the relative sales and the relative average mark-ups of individual energy classes, a simple simulation model is developed that can replicate the observed market dynamics in terms of the evolution of market shares and average prices. The model is used to assess the effect of two alternative EuP policy interventions – a minimum energy performance standard and an energy-labelling scheme – on the average unit cost trajectory and the average price trajectory of a typical EuP category, and hence the financial impacts on producers and consumers.

Understanding urban freight activity: key issues for freight planning

Using information gathered from some 30 UK surveys undertaken over the last 15 years, this paper provides planners with an understanding of road-based urban retail freight transport activity. The findings suggest that the average High Street business could expect up to 10 core goods and 7.6 service visits per week, in non-peak trading periods with 25% additional activity during the build up to Christmas. Vans (‘light goods vehicles’) were the dominant mode, responsible for 42% of delivery activity with a mean dwell time of 10 min. Where possible, load consolidation should be encouraged by methods such as Delivery and Servicing Plans and using out-of-town freight consolidation centres to bring in goods over the last mile in shared vehicles. Where this is not possible, loading bay monitoring and control, and preferred lorry routes can help manage the movement of vehicles in and out of dense urban areas. Service vehicle activity is a significant contributor to urban freight movements and often requires vehicles to be parked close to the premises being served. Centrally coordinating elements of service provision (e.g. for cleaning, equipment maintenance, recyclate collection), or providing improved, more flexible parking provision for service vehicles could be as or more beneficial in reducing overall freight impacts than focusing on core goods deliveries. In the case of the latter, ‘pay-as-you-leave’ car park charging systems could encourage short-stay service vehicles to park off-street.

Should I stay or should I go? Sibling effects in household formation

This paper analyzes peer effects among siblings in the decision to leave parental home. Estimating peer effects is challenging because of problems of refection, endogenous group formation, and correlated unobservables. We overcome these issues using the exogenous variation in siblings' household formation implied by the eligibility rules for a Spanish rental subsidy. Our results show that sibling effects are negative and that these effects can be explained by the presence of old or ill parents. Sibling effects turn positive from older to younger close-in-age siblings, when imitation is more likely to prevail. Our findings indicate that policy makers who aim at fostering household formation should target the household rather than the individual and combine policies for young adults with policies for the elderly.