Net private benefits of purchasing eco-labeled air conditioners and subsidization policies in China

Built on a data set of 527 air conditioner models collected from an online retailer, this study investigates whether the savings that consumers realize on their private electricity bills from purchasing energy-efficient appliances compensate for the additional cost of the appliances on the market, and if not, the size of the gap between the savings and the cost. Our findings show that, except for the most energy-efficient category, the cost savings from using energy-efficient air conditioners does compensate for their higher price. Therefore, any government subsidy should be reserved for the most efficient products. For less energy-efficient appliances, the best policy may be to provide more effective information instead of a subsidy because the subsidy might attract consumers away from more energy-efficient air conditioners and result in an unwanted effect.