Abstract
In this paper, we estimate a differentiated products demand model to analyse
consumers’ choices and willingness to pay for energy efficient household washing
machines in the European Union. We find that energy efficiency positively influences
consumer purchasing decisions for household washing machines. In particular, we
find that consumers have a significant willingness to pay for products that are energy
efficient. On average consumers are willing to pay €143.46 for a washing machine that
is energy efficient. When compared with the average price of products in our dataset,
this represents around a 29% premium. This strong willingness to pay for energy
efficiency is encouraging for policy makers, who want to reach climate change targets
and create regulation that allows manufacturers to differentiate themselves based on
energy efficient product attributes.