TUE 11:30 AM Parallel Session: Microeconomics

Full Report: Tuesday morning brought with it Parallel Session 143 Macroeconomics with the following papers being presented:

  • Dynamic Performance Measurement and Evaluation: Will Bridging Paradigms Lead to Improved System Design, by Kostas Triantis, Warren Vaneman, and Kalian Pasupathy
  • Innovation Diffusion in the Building Construction Industry: Empirically Based Theory Generation, by Stefan Groesser & Silvia Ulli-Beer

  • Citizens’ Choice: Modelling Long Term Technology Transition in the Automobile Industry, by Silvia Ulli-Beer, Mathias Bosshardt, Fritz Gassmann, and Alexander Wokaun

Kostas started (as an economist would) by pointing out that the impact of the performance measurement literature on system design literature is lacking. I am not sure who is not trying hard enough to make the interface happen. The problem statement was “As systems become more complex and time dependent, alternative methods for evaluating and optimizing system performance need to be explored.” He clarified his statements with a behaviour over time graph (fig 1), a utility curve (fig 2) and a system dynamics model (fig 3). Attendees left armed with a definition of Dynamic Productive Efficiency – a measure of a system’s ability to convert inputs into outputs at a specific time t, during a transient period, such that either the largest possible outcome is achieved given a fixed set of inputs (maximization principle), or the least possible inputs are employed given a fixed set of outputs (minimization principle).

There are many possible transition paths

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Fig 1
Fig 2  

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Fig 3

In summary, economics and system dynamics have a lot to offer each other. The Dynamic Productive Efficiency Model provides a roadmap as to how to best to navigate transitional periods. We have to reduce average energy consumption for habitation purposes from 1700 to 700 Watts per capita over the next 150 years.
 
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  • Stefan used some diffusion of innovation theory to show that
  • Learning innovators enable learning and increase acceptance of innovations of new technology
  • Development of voluntary standards reduces the population’s uncertainty about innovative energy efficiency concepts
  • Voluntary standards pave the way for legal standards
  • Commitment of the administration provides the technological basis for intensification of standards
  • Increasing length of the innovation cycle is a result of the intensity level of the existing legal building standard
  • Resource allocation of standard setting experts is based on marginal benefits. Interventions of the administration to motivate the expert group to allocate more resources towards energy efficiency might be successful.

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It may take 150 years to reach the goal.

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There are short  term and long term dynamics.

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The interplay of short term and long term dynamics is important.

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Silvia also made use of Roger’s Adopter Categories, as well as some technology transition process timings and social norms to explain why it will take so long to reach CO2 targets. It seems that only fuel cell or other zero emission vehicles have the capability of reaching the EU reduction targets. These technologies are still not able to be mass produced. The fact that social norms create lock-in effects means that it is likely that there will have to be some intermediate technology between Petrol and Fuel Cell Vehicles.

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The CO2 targets will be hard to achieve

 

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You need to break existing norms if you are to have any hope of establishing new ones.

 
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You need to get the early adopters on board.
It may take about 50 years to get an 85% take up of a new technology.
  • The policy implications from this work are
  • Breaking the existing norm with a variety of new promising technologies (e.g.  bridging technologies) before establishing a new norm
  • In order to reach stated CO2 – Emission targets
    • Bridging technologies can be used for breaking social technology norm
    • The more promising (fuel cell) technology should build up the new dominating social norm

Mark Heffernan

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