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How to build a numerical model III: Which model type to choose?

Now learn when to choose which type of model: optimizations and equilibrium approaches.

Often the optimization and equilibrium approach can be transferred into each other and are thereby equally fitted for your model.

Naturally, there are plenty of computational reasons to choose one or the other. The clearest indication for a specific model type is the number of objectives. When you have more than one value you would like to optimize but can’t simply add them up, equilibrium approaches are the way to go.

As optimizations and equilibrium approaches are highly interlinked anyway, you may tend to see your problem in one way or the other.

So feel free to start your model following your initial intuition about your real world problem!

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Exploring Possible Futures: Modeling in Environmental and Energy Economics

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