The power of mandatory quality disclosure

Manuel Frondel, Andreas Gerster & Colin Vance
Many countries have introduced Energy Performance Certificates (EPCs) to mitigate information asymmetry problems with respect to the thermal quality of houses. Using big data on real estate advertisements that cover large parts of the German housing market, this paper empirically investigates the consequences of a shift from a voluntary to a mandatory quality disclosure regime on the offer prices of houses. Illustrated by a stylized theoretical model, we test the following key hypothesis: Prices for...
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