Computable general equilibrium model PACE

3 The general equilibrium structure of these models is based on Arrow and Debreu (1954). An introduction to applied general equilibrium analysis can be found in Shoven and Whalley (1984). CGE models are used in almost all economic fields to quantify the impact of various policy reforms. For an overview of these studies, see, e.g., Bhattacharyya (1996), Conrad (2002), Gottfried et al. (1990), or Gunning and Keyzer (1995). 

4 The PACE-T(H2) model was first applied for the analysis of introducing hydrogen in the transport sector within HyWays. For more information on HyWays, see www.hyways.de. 

A special feature of PACE-T(H2) is the implementation of passenger cars as a durable consumption good, i.e., there is a separate stock of automobile capital. Households do not consume cars, as such, but transport services, which are produced with various inputs. The value of these services is composed of capital services of the automobile stock present in the respective economy, fuel and expenditure for repair and maintenance. Car lifetime is assumed to be 12 years for all cars. The model distinguishes between three different size classes for cars. These are small, medium and large cars, which are powered by either a conventional technology or hydrogen. 

The following equilibrium conditions constitute the essential parts of the model (i) zero profit conditions for all production sectors (under the assumption of perfect competition), (ii) market clearance on all markets (perfectly adjusting prices) and (iii) exhaustion of the representative consumer s budget through consumption purchases and savings. 

The use of hydrogen as fuel input in passenger transport demands a hydrogen production and distribution technology. The model therefore features a separate 

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