As I’ve argued on this blog before, standards are an important public good – and in the age of information, an increasingly important public good. Here’s some good evidence of the value of high quality standards.
The nascent market for “green” real estate in Beijing, by Siqi Zheng, Jing Wua, Matthew E. Kahnb, Yongheng Deng,
In recent years, formal certification programs for rating and evaluating the sustainability and energy efficiency of buildings have proliferated around the world. Developers recognize that such “green labels” differentiate products and allow them to charge a price premium. China has not formally adopted such rating standards. In the absence of such standards, developers are competing with each other based on their own self-reported indicators of their buildings’ “greenness”. We create an index using Google search to rank housing complexes in Beijing with respect to their “marketing greenness” and document that these “green” units sell for a price premium at the presale stage but they subsequently resell or rent for a price discount. An introduction of a standardized official certification program would help “green” demanders to acquire units that they desire and would accelerate the advance of China’s nascent green real estate market.