Essay On Economic Barriers

2.1.1 Economic Barriers

Economic barriers are also known as non market failure or market barriers. A market barrier, according to Jaffe and Stavins (1994), is defined as “any factor that may account for the “gap”, while another author Brown (2001) defines market barriers as “obstacles that are not based on market failures but which nonetheless contribute to the slow diffusion”. Base on these two definitions a number of barriers could be deduced as economic barriers. They are listed and explained below.

2.1.1 (A) Hidden Cost
When activities like information-gathering, meeting with customers/clients, writing of contracts, book-keeping and etc, carried out they generate costs. If these costs are higher than the actual profit from implementation,

This could be a potential risk. This particular concern is an important consideration for decision-makers (Hirst and Brown, 1990). Further, Stern and Aronson (1984) also emphasis risk as a barrier to energy efficiency, since accurate estimation of the total costs to install energy efficiency measures depend proportionally on future economic conditions in general, and on future energy prices and availability in particular. Energy prices have always been fluctuating since there has been a market for energy, this result in the uncertainty of the future energy prices. One could have no argument but accept a rational retort “how are consumers to make “rational” choices about the purchase of new energy-using systems such as cars, heating equipment, new buildings, and motors when the basis for estimating long-term operating costs is so uncertain? Uncertainty about fuel prices is a barrier to investment in both the manufacture and purchase of energy-efficient systems.” (Hirst and Brown, 1990).The position of small and medium-sized enterprises with regards to risk factor was studied and found that some may not even be able to reduce uncertainty to a calculated risk due to a lack of time and money to calculate the required estimates (Stern and Aronson,