4.0. Normative models: Survey and prescriptions

This chapter provides a survey of the variety of methods that can be applied to construct supply models. These methods consist principally of econometric models, flow models, capacity extension models, dynamic programming models, multi-objective programming models, and special programming models. The concept of a model usually evokes an image of a complex, computerized system of mathematical or econometric equations providing detailed information concerning the operation of the market, industry or system being modeled. In fact, models may be simple or complex, formal or mental, depending upon the purposes for which the model is intended. Simple judgmental models may be most appropriate when monitoring the overall performance of a process. When more detailed information is required and/or when the model is used for planning of complex decision steps, such as the choice of an optimal generation mix for an electric utility, then more complicated models are appropriate. The choice of theoretical structure, implementation methods, and the level of detail represent the an as distinct from the science of modeling. The first order of business in considering any model, then, is to determine the appropriateness of the detail, theory, and implementation methods in relation to the purposes for which the model is intended.