Market transformation describes both a policy objective and a program strategyYork, 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. 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 The American Council for an Energy-Efficient Economy (ACEEE) is a nonprofit, 501(c)(3) organization. Founded in 1980, ACEEE's mission is to act as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behav ...

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. The concept describes a downward-sloping demand curve and an upward-sloping, presumably short-run supply curve.California Energy Commission
/ref> 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 Marketing strategy refers to efforts undertaken by an Organizational structure, organization to increase its sales and achieve competitive advantage. In other words, it is the method of advertising a company's products to the public through an est ...

, building on the

diffusion of innovations Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread. The theory was popularized by Everett Rogers in his book ''Diffusion of Innovations'', first published in 1962. Rogers argue ...

theory through a strategic framework for justifying market intervention.

Implementation

Contrary to traditional energy efficiency strategies, which often focus on small-scale

procurement Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual ...

and installation of efficient products, the goal of market transformation is to produce new patterns of "business as usual" for all actors in the marketplace. Programs act on market inefficiencies by removing quantity or price constraints, or by lowering transaction and uncertainty costs. Market transformation program strategies can resemble demand side management (DSM) as well as supplier innovation interventions but with the added goal of long-term energy savings and changing standard business practices.

Background

Implementation

References

See also