Hicksian Traverse Revisited: Conditions for the Energy Transition

Adrien Nguyen-Huu (1) , Antonin Pottier (2)

1 CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010
2 EHESS - École des hautes études en sciences sociales

In this article, we analyze the transition dynamics, what Hicks called the traverse, from one equilibrium toward another one, and the conditions for such a transfer in a bi-sectoral economy under technological shocks. To this end, we revisit the Hick Traverse model and add to it inter-sectoral relations in the form of intersectoral consumption of energy for both the energy and the manufacturing sector. We investigate two distinct assumptions about consumption behavior of manufactured goods. We show that our model extends Hicks' one and leads to the same condition for a good traverse path, independently from the net energy return. We highlight that energy production technologies nevertheless provide constrains on viable states of the economy and its maximal growth rate, and that energy consumption technologies impact investment and prices crucially.

Mots clés: Hicks Traverse; fixed production technology; equilibrium analysis; traverse analysis; energy economy; sectoral economy

Domaines: Economies et finances

Adrien Nguyen-Huu, Antonin Pottier. Hicksian Traverse Revisited: Conditions for the Energy Transition. 2018. ⟨hal-01966173v1⟩