Frictions in the rental housing market and investments in energy efficiency
Xavier Lambin  1@  , Joachim Schleich, Corinne Faure@
1 : Grenoble Ecole de Management  (GEM)  -  Website
Grenoble École de Management (GEM)
12 Rue Pierre Sémard 38000 Grenoble -  France

Split incentives are a common explanation for the energy efficiency (EE) gap. We show that imperfect matching in the rental housing market may also generate suboptimal investment in EE. In a benchmark without matching imperfections, we show that the first best corresponds to tenants with high energy consumption being matched with landlords who have the lowest costs to invest in EE. With imperfect information about the EE of dwellings, matching may remain efficient but investment in EE is always too low whenever energy expenditures are not fully passed through to the tenant. When tenants' characteristics are also unknown to landlords prior to a match, matching is inefficient. As a consequence, investment efficiency decreases further. It is too low on average. Data from an original survey provides support for these insights.

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