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Expectation formation in energy markets and its impact on the success of future energy policies

The project builds on the hypothesis that current research and policy debates put a too strong emphasis on the historic evolution of economy, technology, and energy systems. In fact, most of the literature in energy and macroeconomics deals with purely history-dependent equilibria. It means that, given the initial conditions (e.g. for capital and knowledge stocks), market participants optimize over a certain time horizon determining unique paths for future consumption, energy use, and investments. Policy can modify the market equilibrium by changing restrictions and relative prices but there is no specific role for expectations. We argue that the formation and the coordination of expectations by appropriate policies are crucial for the success of energy policies. Specifically,we want to find out why market participants expect a new energy system to be successful. Moreover, we seek to derive how specific policies affect the coordination of expectation in a market and to assess policies quantitatively.

Key Information

Work Package / Task: 3.3
Research Partners: ETH Zurich
Keywords: Energy Policy, Energy Strategy, Market Design
Start date: 01.07.2017
End date: 01.10.2020
Status: active

 
Competence Center for Research in Energy, Society and Transition
In case of questions, please contact the Management Office
In case of questions, please contact the Management Office.
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