Model integration and the economics of nuclear power : [a study in applied general equilibrium analysis]

Abstract: At the Stockholm School of Economics a research programme devoted to the economics of energy and natural resources has been pursued since 1973. The main emphasis has been on the construction and application of quantitative models for studies of energy policy and energy markets. In the programme, models of both energy producing sectors and energy using sectors, as well as applied general equilibrium models of the whole economy, have been constructed. This dissertation is a product of this research programme. The author proposes and applies a specific approach to model integration, i.e. the merger of two or several independently developed models. The approach is intended for integrations of activity analysis sector models and applied general equilibrium models. Model integration makes it possible to extend the range of applicability of applied general equilibrium models by exploiting the information contained in sector models. It also makes it possible to evaluate the validity of the partial equilibrium analyses in which sector models often are employed. The proposed approach is used to integrate a sector model of electricity and heat production with a general equilibrium model of the Swedish economy. Both models have been constructed within the research programme. The author uses the integrated model to look at two issues concerning the role of nuclear power on the Swedish electricity market: What are the likely consequences of a nuclear power discontinuation and how does the nuclear power investment programme of the 1970s and the early 1980s compare with a socially efficient one?