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market transformation
Market transformation describes both a policy objective and a program strategy〔York, D. ''(A Discussion and Critique of Market Transformation ), Review 186-1. Energy Center of Wisconsin, June 1999〕 to promote the value and self-sustaining presence of energy-efficient technologies in the marketplace. It is a strategic process of market intervention which aims to alter market behavior by removing identified barriers and leveraging opportunities to further the internalization of cost-effective energy efficiency as a matter of standard practice.〔http://www.aceee.org/topics/market-transformation〕〔http://www.imt.org/about.html〕〔(Northwest Energy Efficiency Alliance, ''NEEA's Definition of Market Transformation''. )〕 Market transformation has rapidly become the objective of many privately and publicly supported energy efficiency programs in the United States and other countries.
== Background ==
First coined in a paper presented at the ACEEE Summer Study in 1992,〔Nadel, Thorne, Sacks, Prindle, Elliott. ''(Market Transformation: Substantial Progress from a Decade of Work )'' American Council for an Energy-Efficient Economy, April 2003.〕 the term "market transformation" is underpinned by the classic microeconomic model of markets, which describes a downward-sloping demand curve and an upward-sloping, presumably short-run supply curve.〔(California Energy Commission )〕 In the energy efficiency market, however, standard price and quantity equilibria are often rendered inefficient because of structural market barriers like split incentives, asymmetric information, distorted market power, and hassle costs.
〔〔 Market transformation targets these barriers to optimal efficiency with strategies to shift entire market sectors into a more efficient product mix.
While it recognizes and harnesses the power of market forces and players, market transformation has also been conceptualized as a holistic, market-based marketing strategy, building on the diffusion of innovations theory through a strategic framework for justifying market intervention.〔
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