Economics and Rational Conservation Policy

Gilbert E. Metcalf, Tufts University

Abstract

Energy analysts have long been concerned with the apparently low level of energy-efficient investments and have suggested the presence of various market barriers and failures that hinder investment. The concept of a barrier as defined here is some force that is working against investment in energy-efficient technologies. Market failures, on the other hand, are failures of the competitive paradigm that lead to economically inefficient outcomes. Market barriers require no particular response on the part of government while market failures may call for some policy response.