FIRM PERSPECTIVE

3.14

Reflection: Feedback from policy to consumer demand

In the previous model exercise, you again chose price signals, but the electricity market itself was endogenously derived by the underlying model.

Last time you picked one case, analysed the response of the firms, and explained the underlying economic logic. Now please compare your results of the new model with the previous exercise: Did your interpretation change, now that the market balance is an endogenous model result?

Is it easier for you to derive a result interpretation when the demand-supply reaction is endogenous or when you have to manually adjust the price level to ensure a balanced system?

We suggest you make a note of your observations.