Hybrid energy-economy models and endogenous technological change

Abstract

Energy-economy models are especially useful to policy makers if they indicate the effect of energy and environment policies on the technology choices of businesses and consumers-what is called endogenous modeling of technological change. The hybrid model described in this chapter is technologically explicit, like a bottom-up engineering model, but also behaviorally realistic, like a top-down macro-economic model. With this combination, it can simulate packages of policies that include economy-wide emissions charges and technology-specific regulations and subsidies. Recent improvement to the model involves estimation of its behavioral parameters from discrete choice surveys of business and consumer technology preferences. © 2005 Springer Science+Business Media, Inc.