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An important aspect of TIMER is the endogenous formulation of technology development, on the basis of learning by doing, which is considered to be a meaningful representation of technology change in global energy models (Azar and Dowlatabadi, 1999; Grubler et al., 1999; Wene, 2000). The general formulation of learning by doing in a model context is that a cost measure y tends to decline as a power function of an accumulated learning measure, where n is the learning rate, Q the cumulative capacity or output, and C is a constant:

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Often n is expressed by the progress ratio p, which indicates how fast the costs metric Y decreases with doubling of Q (p=2-n). Progress ratios reported in empirical studies are mostly between 0.65 and 0.95, with a median value of 0.82 (Argotte and Epple, 1990).

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The indicated market share (IMS) of a technology is determined using a multinomial logit model that assigns market shares to the different technologies (i) on the basis of their relative prices in a set of competing technologies (j).

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MS is the market share of different technologies and c is their costs. In this equation, λ is the so-called logit parameter, determining the sensitivity of markets to price differences.

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