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A fair and stable benefit-sharing for the Northeast Asia Supergrid under flexible networks

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  • Chang, Hee-In
  • Chun, Youngsub
  • Her, Yunji

Abstract

Among five countries in the Northeast Asia (NEA), China, Japan, Mongolia, Russia, and South Korea, there has been a long discussion on the construction of the NEA Supergrid to optimize the use of energy resources. In this paper, we study whether the NEA Supergrid plan in 2030 is beneficial to five countries and if so, how to allocate its benefit to each country in a fair and stable way. By formulating various scenarios on the transmission capacity and the maximum amount of imported power by each country, we search for the optimal network structure when the total benefit is allocated by using the Myerson (1977) value. First, we show that the Myerson value allocation for the 2030 plan satisfies core stability so that no subgroup of countries have incentives to leave the plan. However, it does not satisfy pairwise stability, so that some countries have incentives to modify the network structure. In fact, China and Japan can be better off by adding a new transmission line between them. If this line is added to the plan, then the Myerson value allocation becomes both core stable and pairwise stable. A similar result is obtained for the nucleolus (Schmeidler, 1969).

Suggested Citation

  • Chang, Hee-In & Chun, Youngsub & Her, Yunji, 2021. "A fair and stable benefit-sharing for the Northeast Asia Supergrid under flexible networks," Energy Economics, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004011
    DOI: 10.1016/j.eneco.2021.105521
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    References listed on IDEAS

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    1. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    2. Roger B. Myerson, 1977. "Graphs and Cooperation in Games," Mathematics of Operations Research, INFORMS, vol. 2(3), pages 225-229, August.
    3. Churkin, Andrey & Pozo, David & Bialek, Janusz & Korgin, Nikolay & Sauma, Enzo, 2019. "Can cross-border transmission expansion lead to fair and stable cooperation? Northeast Asia case analysis," Energy Economics, Elsevier, vol. 84(C).
    4. SCHMEIDLER, David, 1969. "The nucleolus of a characteristic function game," LIDAM Reprints CORE 44, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Her, Yunji & Chang, Youngho & Chun, Youngsub & Li, Yanfei, 2018. "A cooperative game theoretic approach on the stability of the ASEAN power grid," Energy Economics, Elsevier, vol. 75(C), pages 492-502.
    6. Cano Berlanga, Sebastian & Giménez Gómez, José M. (José Manuel) & Vilella Bach, Misericòrdia, 2015. "Enjoying cooperative games: The R package GameTheory," Working Papers 2072/247653, Universitat Rovira i Virgili, Department of Economics.
    7. Otsuki, Takashi & Mohd Isa, Aishah Binti & Samuelson, Ralph D., 2016. "Electric power grid interconnections in Northeast Asia: A quantitative analysis of opportunities and challenges," Energy Policy, Elsevier, vol. 89(C), pages 311-329.
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    Cited by:

    1. Zijie Yang & Dong Huang & Yanzhen Wang, 2023. "Measuring the Bilateral Energy Security Cooperation Sustainability between China and Its Neighboring Countries Based on the National Energy Security Level," Sustainability, MDPI, vol. 15(2), pages 1-25, January.

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    More about this item

    Keywords

    Northeast Asia Supergrid; Benefit-sharing; Myerson value; Nucleolus; Core stability; Pairwise stability;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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