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An evolutionary model of energy transitions with interactive innovation-selection dynamics

  • Karolina Safarzyńska


  • Jeroen Bergh


We develop a stylized application of a new evolutionary model to study an energy transition in electricity production. The framework describes a population of boundedly rational electricity producers who decide each period on the allocation of profits among different energy technologies. They tend to invest in below-average cost energy technologies, while also devoting a small fraction of profits to alternative technological options and research on recombinant innovation. Energy technologies are characterized by costs falling with cumulative investments. Without the latter, new technologies have no chance to become cost competitive. We study the conditions under which a new energy technology emerges and technologies coexist. In addition, we determine which investment heuristics are optimal in the sense of minimizing the total cost of electricity production. This is motivated by the idea that, while diversity contributes to system adaptability (innovation) and resilience to unforeseen contingencies (keeping options open), a high cost will discourage investments in it. Copyright Springer-Verlag Berlin Heidelberg 2013

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Article provided by Springer in its journal Journal of Evolutionary Economics.

Volume (Year): 23 (2013)
Issue (Month): 2 (April)
Pages: 271-293

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Handle: RePEc:spr:joevec:v:23:y:2013:i:2:p:271-293
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  1. Canning, David, 1992. "Average behavior in learning models," Journal of Economic Theory, Elsevier, vol. 57(2), pages 442-472, August.
  2. Murat Yildizoglu, 1999. "Competing R&D Strategies in an Evolutionary Industry Model," Computing in Economics and Finance 1999 343, Society for Computational Economics.
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  4. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
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  6. Nikolaos Kouvaritakis & Antonio Soria & Stephane Isoard, 2000. "Modelling energy technology dynamics: methodology for adaptive expectations models with learning by doing and learning by searching," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 14(1/2/3/4), pages 104-115.
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  8. Olsson, Ola & Frey, Bruno S, 2002. " Entrepreneurship as Recombinant Growth," Small Business Economics, Springer, vol. 19(2), pages 69-80, September.
  9. van den Bergh, Jeroen C.J.M., 2008. "Optimal diversity: Increasing returns versus recombinant innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 565-580, December.
  10. Weitzman, Martin L., 1998. "Recombinant Growth," Scholarly Articles 3708468, Harvard University Department of Economics.
  11. Jonathan Kohler, Michael Grubb, David Popp and Ottmar Edenhofer , 2006. "The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 17-56.
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