TY - JOUR
T1 - An economic analysis of the “Home Appliance Eco-Point System” in Japan
AU - Akao, Ken Ichi
N1 - Funding Information:
I am grateful to Tsung-Hsiu Tsai, Geum Soo Kim, Hsiao-Chi Chen, and an anonymous referee for their helpful comments. This study originated from the research project “A theoretical and empirical study on the effect of introducing a new eco-friendly system to market transactions,” which was supported by the Ministry of the Environment as one of the FY 2009–2011 Environmental Economic Policy Research Projects. I am grateful to the Ministry of the Environment for financial support and to the project members, especially Ayu Washizu, Satoshi Nakano and Satoshi Kurokawa, for their helpful comments.
Publisher Copyright:
© 2016, Society for Environmental Economics and Policy Studies and Springer Japan.
PY - 2017/7/1
Y1 - 2017/7/1
N2 - The Home Appliance Eco-Point System was a subsidy program implemented by the Japanese government from May 2009 to March 2011. The system has two features. First, the subsidy was provided in the form of eco-points that were only exchangeable for environmentally friendly goods. Second, it was a replacement subsidy program for durable goods with uncertain termination dates. We investigate the policy implications of these features. We show that if the eco-points are exchangeable for any goods (i.e., if a simple rebate program rather than an eco-point system is implemented), the same outcome can be achieved at a lower subsidy rate and thus using fewer financial resources. Regarding the eco-point system as a replacement subsidy, we show that the uncertain termination has the same effect as an increase in the subsidy: both accelerate the replacement. Uncertainty is a substitute for a subsidy, thus saving the financial resources of the government. However, there are two welfare concerns: (a) acceleration may not be desirable in terms of the environment, and (b) it costs households their expected utility.
AB - The Home Appliance Eco-Point System was a subsidy program implemented by the Japanese government from May 2009 to March 2011. The system has two features. First, the subsidy was provided in the form of eco-points that were only exchangeable for environmentally friendly goods. Second, it was a replacement subsidy program for durable goods with uncertain termination dates. We investigate the policy implications of these features. We show that if the eco-points are exchangeable for any goods (i.e., if a simple rebate program rather than an eco-point system is implemented), the same outcome can be achieved at a lower subsidy rate and thus using fewer financial resources. Regarding the eco-point system as a replacement subsidy, we show that the uncertain termination has the same effect as an increase in the subsidy: both accelerate the replacement. Uncertainty is a substitute for a subsidy, thus saving the financial resources of the government. However, there are two welfare concerns: (a) acceleration may not be desirable in terms of the environment, and (b) it costs households their expected utility.
KW - Eco-point
KW - Environmentally friendly goods
KW - Replacement subsidy
KW - Uncertain termination
KW - Voucher
UR - http://www.scopus.com/inward/record.url?scp=84964507795&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84964507795&partnerID=8YFLogxK
U2 - 10.1007/s10018-016-0156-3
DO - 10.1007/s10018-016-0156-3
M3 - Article
AN - SCOPUS:84964507795
SN - 1432-847X
VL - 19
SP - 483
EP - 501
JO - Environmental Economics and Policy Studies
JF - Environmental Economics and Policy Studies
IS - 3
ER -