Coordination Under Uncertain Conditions : An Analysis of the Fukushima Catastrophe
Abstractï»¿This paper analyzes the impacts of the 11 March 2011 earthquake and tsunami at the Fukushima nuclear power plant in Japan, which were amplified by a failure of coordination across the plant, corporate, industrial, and regulatory levels, resulting in a nuclear catastrophe, comparable in cost to Chernobyl. It derives generic lessons for industrial structure and regulatory frame of the electric power industry by identifying the two shortcomings of a horizontal coordination mechanism : instability under large shock and the lack of â€œdefense in depth.â€ The suggested policy response is to harness the power of â€œopen-interface-rule-based modularityâ€ by creating an independent nuclear safety commission and an independent system operator owning the transmission grids in Japan. We propose a transitory price mechanism that can restrain price volatility while providing investment incentives.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Governance Working Papers with number 23220.
Date of creation: Oct 2011
Date of revision:
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Japan; coordination mechanism; horizontal coordination mechanism; Fukushima;
Other versions of this item:
- Aoki, Masahiko & Rothwell, Geoffrey, 2011. "Coordination Under Uncertain Conditions: An Analysis of the Fukushima Catastrophe," ADBI Working Papers 316, Asian Development Bank Institute.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
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- Aoki, Masahiko, 2010. "Corporations in Evolving Diversity: Cognition, Governance, and Institutions," OUP Catalogue, Oxford University Press, number 9780199218530, September.
- Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008. "When Does Coordination Require Centralization? Corrigendum," American Economic Review, American Economic Association, vol. 98(3), pages 1195-96, June.
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