Response to Besen and Johnson’s Comment on “Economic Implications of Mandated Efficiency Standards for Household Appliances”

Abstract

It is hard to undertake as structured an analysis of Besen and Johnson's Comment as we would like. Parts of their Comment are not coherent (for example, the relationship between Figures 1 and 2; the circular reasoning behind Figure l;1 the discussion of the switch to less efficient appliances; the confusion between the impact of efficiency on appliance utilization as opposed to appliance ownership; the confusion of mandated standards with usage constraint; and the mixup of econometric evidence with illustrative data, etc.). But the problem one has the greatest difficulty with is the tautological nature of the results in the Comment. The authors define the problem in such a way that certain results follow, and then proceed to derive those results formally. In light of the above, we will here respond mainly to the general thrust of the Comment, rather than attempting to respond point by point. Since the authors'