Want some evidence for why technology mandate legislation is fraught with difficulties? This New York Times article on innovation in incandescent light bulb technology is a datum:
When Congress passed a new energy law two years ago, obituaries were written for the incandescent light bulb. The law set tough efficiency standards, due to take effect in 2012, that no traditional incandescent bulb on the market could meet, and a century-old technology that helped create the modern world seemed to be doomed.
But as it turns out, the obituaries were premature.
The article goes on to describe the energy efficiency improvements in newly-designed incandescents, with the implication that the 2007 legislation mandating efficiency standards induced the innovation. Incandescent innovation is occurring in a very dynamic context, with simultaneous developments in compact fluorescents and LED lighting. As the NYT article notes,
Despite a decade of campaigns by the government and utilities to persuade people to switch to energy-saving compact fluorescents, incandescent bulbs still occupy an estimated 90 percent of household sockets in the United States. Aside from the aesthetic and practical objections to fluorescents, old-style incandescents have the advantage of being remarkably cheap.
But the cheapest such bulbs are likely to disappear from store shelves between 2012 and 2014, driven off the market by the government’s new standard. Compact fluorescents, which can cost as little as $1 apiece, may become the bargain option, with consumers having to spend two or three times as much to get the latest energy-efficient incandescents.
The reality is that we have this efficiency legislation, and by focusing on performance it’s better than an outright ban on incandescents, which would be incredibly distortionary, given the consumer welfare attached to the different light qualities and low price associated with incandescents (dimmable compacts anyone? Not so much.).
But I have to ask: isn’t this yet another situation in which we implement government regulation as a counterweight to the distortionary consequences of existing government regulation? If our individual electricity consumption were more transparent to us, and we had better and more timely information about the electricity consumption of the various appliances and systems in our buildings, AND if we had more accurately timely electricity pricing that wasn’t infused with state legislative social policy, would incandescent light bulbs have stayed this inefficient for this long? If we had those changes in the retail electricity industry, would we need Congressional energy efficiency legislation? How much energy efficiency improvement could we get through organic market processes, without the economic distortions and the restriction of individual autonomy that accompanies such government intervention?