In their article ‘The electricity market is at a crossroads’, WiSo Professor Dr. Axel Ockenfels, Max Planck Institute for Research on Collective Goods, Bonn, and Professor Dr. Veronika Grimm, Technical University of Nuremberg, criticise the current electricity market design in Germany. They argue that it has become inefficient due to state intervention and a lack of adaptation to a decentralised electricity system. The capacity markets preferred by policymakers are seen as problematic because they shift market risks, lead to high costs and reinforce false incentives. Instead, they advocate a market-oriented design with regionally differentiated electricity prices, a strengthening of the CO2 price and market-based capacity assurance in order to manage investments and innovations more efficiently and to sustainably secure the energy transition.
Prof. Ockenfels researches why people behave the way they do and, on this basis, develops economic design solutions when incentive architectures and markets fail or when innovative approaches to behavioural change are required. He combines game theory with behavioural research and works with scientists from psychology, computer science and related disciplines. His research results contribute to a new, descriptively successful body of economic theory. In addition, they often prove useful for practical challenges. Examples of this include his contributions to the design of digital markets, such as eBay and the sharing economy, to the design of electricity markets for the energy transition, to international climate policy, and to auctions in the health, finance and telecommunications sectors.
