A vintage model of technology diffusion: The effects of returns to disversity and learning by using

The diffusion of new technologies is a lengthy process and many firms continue to invest in relatively old technologies. This paper develops a vintage model of technology adoption and diffusion that aims at explaining these two phenomena. Our explanation for these phenomena emphasises the relevance of complementarity between different vintages (or, alternatively, returns to diversity) and learning-by- using. The model is characterised by simultaneous investments in vintages of different quality and endogenously determined scrapping of old technologies. We show that the stronger the complementarity between different vintages and the stronger the learning-by-using, the longer it takes before firms scrap (seemingly) inferior technologies

Economic analysis of batteries: Impact on security of electricity supply and renewable energy expansion in Germany

Increasing amounts of fluctuating renewable energy lead to decreasing electricity prices and impair security of electricity supply. Consequently, sustainable and economically feasible solutions need to be found to ensure both ongoing renewable energy expansion and stable electricity supply. We examine the impact of batteries on security of the electricity supply and achieving renewable energy expansion. For this purpose we develop an electricity market model that enables the simulation of batteries both as an economic-driven investment option and as a government subsidized option. We present six policy scenarios in which batteries are utilized as an option that is subsidized by the government to secure electricity supply and engender renewable energy expansion. Our simulations, based on empirical data, indicate that, in a free market, battery investments are not profitable for private investors. On the other hand, these six policy scenarios show that by subsidizing investments in batteries governments could ensure a secure electricity supply as well as ongoing renewable energy expansion. A comparison to similar policy scenarios that do not adopt batteries indicates that the total sum of gove

Explaining the Energy-Efficiency Paradox. A Vintage Model with Returns to Diversity and Learning-by-Using: A Vintage model with returns to diversity and learning-by-using

This paper studies the adoption and diffusion of energy-saving technologies in a vintage model. An important characteristic of the model is that vintages are modeled as being complementary: there are returns to diversity of using different vintages. We analyse how diffusion patterns and adoption behaviour are affected by complementarity and learning-by-using. It is shown that the stronger the complementarity between different vintages and the stronger the learning-by-using, the longer it takes before firms scrap (seemingly) inferior technologies. We argue that this is a potentially relevant part of the explanation of the energy-efficiency paradox. Furthermore we explore the effects of energy tax policies