summary economics of regulating markets universiteit groningen EBM148A05
, summary economics of regulating markets universiteit groningen EBM148A05
This is the complete summary, however, please refer to the book for figures and tables,
these are not included, only described.
,summary economics of regulating markets universiteit groningen EBM148A05
,summary economics of regulating markets universiteit groningen EBM148A05
, summary economics of regulating markets universiteit groningen EBM148A05
1 INTRODUCTION
1.1 Background
1.1.1 Importance of energy for economic development
Figure 1.1 Development in global population, GDP, Energy use and CO2 emissions
The growth in energy consumption has been smaller than the growth in welfare
because of the increase in energy efficiency and changes within the structures of
economies. Because of this, the energy intensity measured by the energy use per unit
of income has decreased strongly since 1990.
Figure 1.2 Development in global GDP/capita, energy intensity, energy use per capita
and carbon intensity
1.1.2 Societal consequences of energy use
Figure 1.3 Access to electricity and clean fuels in number of global regions, 2016
Figure 1.4 Presence of energy poverty in number of European countries, 2015 From
this brief overview it appears that energy is an important contributor to economic
development and well-being of human beings, but limited availabilities and high
prices of energy can create social problems, while the intensive use of fossil energy
creates has dramatic environmental effects.
1.2 Energy markets, climate policy and energy transition policy
1.2.1 Energy markets
Decentralized decision-making must not be confused with the decentralization of the
energy system. The latter concept means that energy is more frequently produced
within the distribution networks, whereas decentralized decision-making implies that
decisions on investments, among other things, are no longer coordinated, but are
made by a number of decision- making units (firms, households) independently of
each other. Uncoordinated decentralized decision- making is an important
precondition for efficient markets, because only then can competition develop.
1.2.2 Climate policy and energy transition policy
Energy transition in the framework of the above-mentioned decentralized energy
markets means that governments aim to influence the decisions made by the
decentralized units (i.e. firms, consumers) in such a way that, at the end of the day,
energy produced by renewable means will represent a greater portion of the national
energy consumption
, summary economics of regulating markets universiteit groningen EBM148A05
1.2.3 Energy markets and climate policy
The promotion of market forces in the energy sector focuses on efficiency: producing
energy as costeffectively as possible (which is called productive efficiency), ensuring
that consumers don't pay a higher price than is necessary (which refers to allocative
efficiency) and promoting innovation (which is called dynamic efficiency). The goal
of climate policy is to reduce greenhouse gas emissions, amongst otherby realising a
transition in the energy sector. This requires a more intensive intervention of
governments in the decisions of energy producers and consumers which may be at
odds with the concept of liberalized markets based on free decentralized decision
making.
1.3 Approaches to analyse regulation
1.3.1 Public-interest approach
The public interest approach is a normative approach. Based on this approach, we
want to analyse how governments can improve welfare by intervening in energy
markets.
Market failures are fundamental shortcomings in markets which make it impossible
for a market to generate the maximum possible level of welfare. To what extent
policy measures should be implemented to address market failures also depends on
their effectiveness and efficiency.
1.3.2 Other Approaches
According to the capture theory, government interventions in society result from
lobbying behaviour of interest groups. This theory states that, amongst others, the
better a group is organized, the more influence it may have on government decisions.
Another positive theory on regulation is the economic theory of regulation, which
departs from the interest of politicians. This theory states that politicians are
permanently searching for political support in order to become re-elected and,
therefore, their decisions are meant to maximize this support.
1.4 Organisation of the book
1.4.1 Target group
1.4.2 Learning objectives
1.4.3 Outline
This textbook on the regulation of energy markets consists of 12 chapters. Each
chapter starts with presenting the outline and ends with providing some exercises to
, summary economics of regulating markets universiteit groningen EBM148A05
This is the complete summary, however, please refer to the book for figures and tables,
these are not included, only described.
,summary economics of regulating markets universiteit groningen EBM148A05
,summary economics of regulating markets universiteit groningen EBM148A05
, summary economics of regulating markets universiteit groningen EBM148A05
1 INTRODUCTION
1.1 Background
1.1.1 Importance of energy for economic development
Figure 1.1 Development in global population, GDP, Energy use and CO2 emissions
The growth in energy consumption has been smaller than the growth in welfare
because of the increase in energy efficiency and changes within the structures of
economies. Because of this, the energy intensity measured by the energy use per unit
of income has decreased strongly since 1990.
Figure 1.2 Development in global GDP/capita, energy intensity, energy use per capita
and carbon intensity
1.1.2 Societal consequences of energy use
Figure 1.3 Access to electricity and clean fuels in number of global regions, 2016
Figure 1.4 Presence of energy poverty in number of European countries, 2015 From
this brief overview it appears that energy is an important contributor to economic
development and well-being of human beings, but limited availabilities and high
prices of energy can create social problems, while the intensive use of fossil energy
creates has dramatic environmental effects.
1.2 Energy markets, climate policy and energy transition policy
1.2.1 Energy markets
Decentralized decision-making must not be confused with the decentralization of the
energy system. The latter concept means that energy is more frequently produced
within the distribution networks, whereas decentralized decision-making implies that
decisions on investments, among other things, are no longer coordinated, but are
made by a number of decision- making units (firms, households) independently of
each other. Uncoordinated decentralized decision- making is an important
precondition for efficient markets, because only then can competition develop.
1.2.2 Climate policy and energy transition policy
Energy transition in the framework of the above-mentioned decentralized energy
markets means that governments aim to influence the decisions made by the
decentralized units (i.e. firms, consumers) in such a way that, at the end of the day,
energy produced by renewable means will represent a greater portion of the national
energy consumption
, summary economics of regulating markets universiteit groningen EBM148A05
1.2.3 Energy markets and climate policy
The promotion of market forces in the energy sector focuses on efficiency: producing
energy as costeffectively as possible (which is called productive efficiency), ensuring
that consumers don't pay a higher price than is necessary (which refers to allocative
efficiency) and promoting innovation (which is called dynamic efficiency). The goal
of climate policy is to reduce greenhouse gas emissions, amongst otherby realising a
transition in the energy sector. This requires a more intensive intervention of
governments in the decisions of energy producers and consumers which may be at
odds with the concept of liberalized markets based on free decentralized decision
making.
1.3 Approaches to analyse regulation
1.3.1 Public-interest approach
The public interest approach is a normative approach. Based on this approach, we
want to analyse how governments can improve welfare by intervening in energy
markets.
Market failures are fundamental shortcomings in markets which make it impossible
for a market to generate the maximum possible level of welfare. To what extent
policy measures should be implemented to address market failures also depends on
their effectiveness and efficiency.
1.3.2 Other Approaches
According to the capture theory, government interventions in society result from
lobbying behaviour of interest groups. This theory states that, amongst others, the
better a group is organized, the more influence it may have on government decisions.
Another positive theory on regulation is the economic theory of regulation, which
departs from the interest of politicians. This theory states that politicians are
permanently searching for political support in order to become re-elected and,
therefore, their decisions are meant to maximize this support.
1.4 Organisation of the book
1.4.1 Target group
1.4.2 Learning objectives
1.4.3 Outline
This textbook on the regulation of energy markets consists of 12 chapters. Each
chapter starts with presenting the outline and ends with providing some exercises to
