sub-system (energy, environment, economy) and the dynamic mechanisms of the
agents’ behaviour.
- It formulates separately the supply or demand behaviour of the economic agents that
are considered to optimise individually their objective while market derived prices
guarantee global equilibrium.
- It considers explicitly the market clearing mechanism and the related price
formation in the energy, environment and economy markets: prices are computed by
the model as a result of supply and demand interactions in the markets and different
market clearing mechanisms, in addition to perfect competition, are allowed.
- The model is simultaneously multinational (for the EU or the World) and specific
for each country/region; appropriate markets clear European/World wide, while
country/region-specific policies and distributional analysis are supported.
- Although it is global, the model exhibits a sufficient degree of disaggregation
concerning sectors, structural features of energy/environment and policy-oriented
instruments (e.g. taxation). The model formulates production technologies in an
endogenous manner allowing for price-driven derivation of intermediate
consumption and the demand for services from capital and labour. For the demand-
side the model formulates consumer behaviour based on a nested Stone Geary utility
function. It distinguishes between durable (equipment) and consumable goods and
services. The model is dynamic, driven by the accumulation of capital and
equipment. Technological progress is explicitly represented in the production
functions and for each production factor.
- In its environmental module, the model evaluates the energy-related emissions of
CO2, nitrogen oxides (NOx), sulphur dioxide (SO2), volatile organic compounds
(VOC) and particulates (PM) and translates them into concentration or deposition of