A NEO-SCHUMPETERIAN MODEL OF ENERGY MARKETS

The article deals with a Neo-Schumpeterian growth model which in addition to the traditional production factors labor and capital, also includes energy. Contrary to mainstream neoclassical approaches, which assume a representative optimizing actor, the heterogeneous actors in our model behave experimentally and in their interactions path dependencies might appear. In particular, the experimental behavior focuses on product innovations in the preliminary product industries which we conceive as the energy industries. In line with the standard literature, the following questions are addressed: What are the effects of energy-saving, and what are the effects of a singular reduction of energy consumption on the economy, both in the short- and long-term? Our Neo-Schumpeterian approach allows us to generate results that are directly comparable with mainstream neoclassical models. The model is designed in a way that by switching off the Neo-Schumpeterian innovation process allows the reproduction of traditional results. Considering, however, uncertain product innovations and path dependencies alters these results and generates new insights.