Abstract The Polish coal industry has been undergoing restructuring to provide for its transition to a competitive environment. The coal industry has responded by attempting to downsize its capacity, to increase exports, to reduce employment and to increase productivity. In facing the challenges of the impacts of stronger environmental regulations, the industry has also been forced to consider regional adjustments in different districts of Poland. These kinds of transition difficulties warrant the formulation of a modeling approach that would analyze regional restructuring policies. This paper presents the results of a spatial equilibrium optimization approach that has been designed to meet this need. The modeling framework consists of two-coupled programming models. The first model explains coal production and investment and analyzes decisions related to the closures of unprofitable mines, the construction of new mines in different locations, and the installation of beneficiation equipment and emissions reduction equipment. The second model evaluates coal demand regional distribution patterns based on a spatial equilibrium optimization procedure. The two models are operated sequentially to analyze several scenarios that describe the evolution of the Polish coal market through its recent and future transitions.
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