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Externalities in the games over electrical power transmission networks

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Author Info

  • David Csercsik

    ()
    (Process Control Research Group - Computer and Automation Institute, Hungarian Academy of Sciences)

  • Laszlo A. Koczy

    ()
    (Institute of Economics - Hungarian Academy of Sciences)

Abstract

An electrical transmission network consists of producers, consumers and the power lines connecting them. We build an ideal (lossless) DC load flow model as a cooperative game over a graph with the producers and consumers located at the nodes, each described by a maximum supply or desired demand and the power lines represented by the edges, each with a given power transmission capacity and admittance value describing its ability to transmit electricity. Today's transmission networks are highly interconnected, but organisationally partitioned into several subnetworks, the so-called balancing groups with balanced production and consumption. We study the game of balancing group formation and show that the game contains widespread externalities that can be both negative and positive. We study the stability of the transportation network using the recursive core. While the game is clearly cohesive, we demonstrate that it is not necessarily superadditive. We argue that subadditivity may be a barrier to achieve full cooperation. Finally the model is extended to allow for the extension of the underlying transmission network.

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Bibliographic Info

Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 1125.

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Length: 28 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:has:discpr:1125

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Keywords: Energy transmission networks; Cooperative game theory; Partition function form games; Externalities;

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References

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  1. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  2. Richard Gilbert & Neuhoff, K. & Newbery, D., 2002. "Allocating Transmission to Mitigate Market Power in Electricity Networks," Cambridge Working Papers in Economics 0225, Faculty of Economics, University of Cambridge.
  3. László Á. Kóczy, 2006. "Sequential coalition formation and the core in the presence of externalities," Working Paper Series 0801, Óbuda University, Keleti Faculty of Business and Management, revised Apr 2008.
  4. Hobbs, Benjamin F. & Kelly, Kevin A., 1992. "Using game theory to analyze electric transmission pricing policies in the United States," European Journal of Operational Research, Elsevier, vol. 56(2), pages 154-171, January.
  5. Neuhoff, Karsten & Barquin, Julian & Boots, Maroeska G. & Ehrenmann, Andreas & Hobbs, Benjamin F. & Rijkers, Fieke A.M. & Vazquez, Miguel, 2005. "Network-constrained Cournot models of liberalized electricity markets: the devil is in the details," Energy Economics, Elsevier, vol. 27(3), pages 495-525, May.
  6. Yihsu Chen & Benjamin Hobbs & Sven Leyffer & Todd Munson, 2006. "Leader-Follower Equilibria for Electric Power and NO x Allowances Markets," Computational Management Science, Springer, vol. 3(4), pages 307-330, September.
  7. Cardell, Judith B. & Hitt, Carrie Cullen & Hogan, William W., 1997. "Market power and strategic interaction in electricity networks," Resource and Energy Economics, Elsevier, vol. 19(1-2), pages 109-137, March.
  8. Kleindorfer, Paul R. & Wu, D. -J. & Fernando, Chitru S., 2001. "Strategic gaming in electric power markets," European Journal of Operational Research, Elsevier, vol. 130(1), pages 156-168, April.
  9. László Kóczy, 2007. "A recursive core for partition function form games," Theory and Decision, Springer, vol. 63(1), pages 41-51, August.
  10. Gately, Dermot, 1974. "Sharing the Gains from Regional Cooperation: A Game Theoretic Application to Planning Investment in Electric Power," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 195-208, February.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Nem minden hálózat szuper (lehet szubadditív is)
    by Kóczy László in Kóczy játékelmélet blogja on 2011-05-30 13:18:00
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Cited by:
  1. David Csercsik, 2013. "Competition and cooperation in a PFF game theoretic model of electrical energy trade," IEHAS Discussion Papers 1310, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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