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Integrating Bottom-Up into Top-Down: A Mixed Complementarity Approach

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  • Böhringer, Christoph
  • Rutherford, Thomas F.

Abstract

We motivate the formulation of market equilibria as a mixed complementarity problem (MCP) in order to bridge the gap between bottom-up energy system models and top-down general equilibrium models for energy policy analysis. Our objective is primarily pedagogic. We first lay out that the MCP approach provides an explicit representation of weak inequalities and complementarity between decision variables and market equilibrium conditions. This permits us to combine bottom-up technological details and top-down economic richness in a single mathematical format. We then provide a stylized example of how to integrate bottom-up features into a top-down modeling framework along with worked examples and computer programs which illustrate our approach.

Suggested Citation

  • Böhringer, Christoph & Rutherford, Thomas F., 2005. "Integrating Bottom-Up into Top-Down: A Mixed Complementarity Approach," ZEW Discussion Papers 05-28, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:4271
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    References listed on IDEAS

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    4. Gronau, Steven & Winter, Etti, 2018. "Social Accounting Matrix: A user manual for village economies," Hannover Economic Papers (HEP) dp-636, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    5. Al-Riffai, Perrihan & Breisinger, Clemens & Mondal, Md. Hossain Alam & Ringler, Claudia & Wiebelt, Manfred & Zhu, Tingju, 2017. "Linking the economics of water, energy, and food: A nexus modeling approach," MENA working papers 4, International Food Policy Research Institute (IFPRI).
    6. Besagni, Giorgio & Borgarello, Marco & Premoli Vilà, Lidia & Najafi, Behzad & Rinaldi, Fabio, 2020. "MOIRAE – bottom-up MOdel to compute the energy consumption of the Italian REsidential sector: Model design, validation and evaluation of electrification pathways," Energy, Elsevier, vol. 211(C).
    7. Krook-Riekkola, Anna & Berg, Charlotte & Ahlgren, Erik O. & Söderholm, Patrik, 2017. "Challenges in top-down and bottom-up soft-linking: Lessons from linking a Swedish energy system model with a CGE model," Energy, Elsevier, vol. 141(C), pages 803-817.
    8. Milad Maralani & Milad Maralani & Basil Sharp & Golbon Zakeri, 2016. "The Potential Impact of Industrial Energy Savings on The New Zealand Economy," EcoMod2016 9308, EcoMod.
    9. Maximilian Hoffmann & Leander Kotzur & Detlef Stolten & Martin Robinius, 2020. "A Review on Time Series Aggregation Methods for Energy System Models," Energies, MDPI, vol. 13(3), pages 1-61, February.
    10. Eskeland, Gunnar S. & Rive, Nathan A. & Mideksa, Torben K., 2012. "Europe’s climate goals and the electricity sector," Energy Policy, Elsevier, vol. 41(C), pages 200-211.
    11. Sue Wing, Ian, 2008. "The synthesis of bottom-up and top-down approaches to climate policy modeling: Electric power technology detail in a social accounting framework," Energy Economics, Elsevier, vol. 30(2), pages 547-573, March.
    12. Charlotte Senkpiel & Audrey Dobbins & Christina Kockel & Jan Steinbach & Ulrich Fahl & Farina Wille & Joachim Globisch & Sandra Wassermann & Bert Droste-Franke & Wolfgang Hauser & Claudia Hofer & Lars, 2020. "Integrating Methods and Empirical Findings from Social and Behavioural Sciences into Energy System Models—Motivation and Possible Approaches," Energies, MDPI, vol. 13(18), pages 1-30, September.
    13. Lucas Bretschger & Lin Zhang & Roger Ramer, 2012. "Economic effects of a nuclear-phase out policy: A CGE analysis," CER-ETH Economics working paper series 12/167, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    14. Steven Gronau & Etti Winter & Ulrike Grote, 2020. "Aquaculture, fish resources and rural livelihoods: a village CGE analysis from Namibia’s Zambezi Region," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(2), pages 615-642, February.

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    More about this item

    Keywords

    Energy Policy; Computable General Equilibrium; Bottom-Up; Top-Down;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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